The U.S. Treasury market has flashed warning signs in recent weeks, and rising yields suggest conditions may be worse than they look on the surface, according to Robin Brooks, a senior fellow at the Brookings Institution.

In a Substack post published Tuesday, Brooks argued that U.S. policy is now centered on stopping long-term borrowing costs from spiraling higher. He pointed to Treasury Secretary Scott Bessent's push to double debt buybacks—a program in which the department repurchases older, less liquid securities to help trading conditions in the world's largest bond market—as well as Fed Chair Kevin Warsh's Jackson Hole speech, which reassured markets about his inflation-fighting credibility.

Brooks noted that economic data pointing to weaker activity has failed to pull long-term yields lower—breaking with the historical pattern—and that this reveals just how much upward pressure is building within the market itself. That pressure reflects what economists call the term premium, the extra compensation investors demand to hold longer-dated debt rather than rolling short-term securities.

"As far as I can tell, it's an all-hands-on-deck situation where long-term yields are concerned," he wrote.

Although Friday's jobs report came in stronger than expected, other economic releases over the past month have consistently missed expectations, Brooks said. Instead of yields falling to reflect a slowing economy and cooler inflation, they have climbed steadily.

The U.S. conflict with Iran has also escalated in recent weeks. With fighting intensifying and no diplomatic breakthrough in sight, oil prices have rebounded, darkening the inflation outlook.

Still, Brooks argued that the anomalous behavior of the 10-year yield signals that "demand for Treasury debt is weaker than first meets the eye." The 10-year yield is a benchmark that feeds through to borrowing costs across the economy, from mortgage rates to corporate bonds, so a sustained climb raises financing costs well beyond the federal government.

With U.S. debt now standing at $40 trillion, it is beginning to eclipse even the AI boom as Wall Street's chief preoccupation. Nor are debt concerns confined to the United States: yields in other major economies—including the U.K., France, Germany, and Japan—have also surged, a reminder that heavy post-pandemic borrowing is testing government bond markets worldwide.

Since the COVID pandemic, governments have kept spending as though borrowing costs were still at crisis-era lows, allowing deficits to widen as if their economies still urgently needed emergency stimulus.

The economic landscape, however, has changed entirely. Interest rates have surged in recent years to fight high inflation, while the AI boom is channeling hundreds of billions of dollars a year into an economy increasingly insulated from higher rates.

"When does debt become unsustainable? When the global financial markets say it is," RSM Chief Economist Joseph Brusuelas said in a note last month. "That appears to be happening."

The buyer base for U.S. debt has also shifted. Foreign central banks and other institutions seeking safe places to park capital now play a diminished role in the Treasury market and have increasingly turned to alternative havens such as gold, which has traded near record highs in recent years.

Norges Bank Investment Management, the world's largest sovereign wealth fund with $2.3 trillion in assets, has proposed reshuffling its debt holdings away from Treasuries.

As traditional buyers retreat, hedge funds have stepped in as major participants—and because they are more price sensitive, they are fueling volatility in the debt market. That leaves the Treasury Department needing to offer attractive yields to keep bond investors returning, which in turn raises the government's interest bill and compounds the deficit problem.

With the budget deficit heading toward $2 trillion a year and no sign that lawmakers intend to rein it in, the market is growing uneasy about continuing to lend to the federal government at such levels. How upcoming Treasury auctions are received, and whether monthly buyback levels keep expanding, will be closely watched signals of investor appetite.

For Brooks, the disconnect between yields and economic data points to an "obvious explanation": markets are increasingly focused on the deficit outlook and are pushing longer-term rates higher.

"The underlying dynamic in the Treasury market is more worrying than you think," he added.

Others, however, read rising yields as evidence of economic strength. Wall Street veteran Ed Yardeni has dismissed warnings of an imminent debt crisis, arguing instead that yields are simply normalizing to levels that prevailed before the Great Financial Crisis and the COVID pandemic ushered in an era of ultra-low rates.

The current trajectory of U.S. debt is admittedly unsustainable, Yardeni acknowledged in a recent note, but the so-called bond vigilantes do not appear worried—at least not yet.

"Treasury yields remain in a range broadly consistent with a healthy economy, and we expect the 10-year yield to remain between 4.00% and 5.00%," Yardeni predicted.

This story was originally featured on Fortune.com.