WASHINGTON — Long-term U.S. Treasury yields have shown little sign of easing since Federal Reserve Chair Kevin Warsh's speech at Jackson Hole. The 30-year yield has risen to its highest level in 19 years, and the 10-year yield reached its highest in one year and eight months. Investors were unsettled by Warsh's warning on inflation, and his mixed signals on whether rates would rise triggered selling in Treasuries. On the fiscal soundness debate that has driven yields higher, Treasury Secretary Scott Bessent dismissed the prospect of spending cuts, saying growth is the answer.
Bessent said at a Group of 20 finance ministers' meeting in Asheville, North Carolina, on the 31st of last month that the world is struggling under an enormous debt burden and that the only way out of the situation is growth. U.S. national debt has passed $40 trillion, and the remarks point to lifting the economic growth rate to reduce the real debt burden rather than tightening fiscal policy.
Bessent's comments added to the selling in Treasuries. On the 1st, the 30-year Treasury yield rose past 5.270%, up more than 0.4% from the previous day. The 10-year yield climbed 0.46% to 4.780%. In the middle of last month, the 30-year yield touched 5.34%, its highest since 2007. It has now stayed above 5% for 55 trading sessions, the longest such stretch since 2006. The 10-year yield is at its highest level since January 2025.
On the surface, the driver of rising yields is prices. At the Jackson Hole symposium on the 28th of last month, Warsh warned that price pressures remain excessively high. Markets read that as raising the odds of a rate increase, and the 10-year yield — the benchmark for U.S. mortgages, corporate bonds and other borrowing — jumped immediately afterward.
As time has passed, however, a different reading has emerged within the bond market. In the speech, Warsh noted that medium- and longer-term inflation expectations remain stable, and long-term inflation expectations have since edged lower.
Yahoo Finance said the increase in the 30-year yield immediately after Warsh's remarks reflected real interest rates rather than higher inflation. That means investors are not simply betting that prices will rise but are demanding higher returns in exchange for locking up funds in long-dated Treasuries. Expectations for U.S. growth, uncertainty over Fed policy and large-scale Treasury issuance can all push that yield higher.
Interpretations also diverge on whether the Warsh-led Fed will raise rates. Bloomberg said that if he hesitates to raise rates, selling of long-dated bonds by major investors such as insurers could increase, pushing long-term Treasury yields still higher.
Bessent, meanwhile, pushed back against reading higher Treasury yields as market distrust of U.S. public finances. He told Reuters on the 30th that he was not sure where the turmoil in the bond market was supposed to be, and that the U.S. bond market is delivering the strongest performance among major economies this year. He stressed that the U.S. is in a stronger position than many advanced economies because it continues to grow even amid large fiscal deficits.
Some observers expect the U.S. to respond to rising yields by expanding demand for Treasuries. Aggressive tightening, they argue, could weigh on economic growth and carry a political cost.
That has put weight on formalizing rules for stablecoins, which raise funds through Treasury demand. Bessent said last year that stablecoins would increase demand for Treasuries. Stablecoins are digital assets whose value is pegged to specific assets, such as U.S. Treasuries, to limit price volatility. As that market grows, demand for short-term Treasuries rises with it. Easing bank regulations is also seen as a step aimed at expanding Treasury demand. Lowering the capital charges that apply when banks hold or intermediate Treasuries could increase financial institutions' capacity to buy government debt.
President Donald Trump, for his part, said U.S. interest rates are too high, effectively pressing Warsh to cut them. Asked at the White House the same day whether he opposed the rate increase Warsh had signaled, Trump said no and that Warsh would do his job, while arguing that U.S. rates are currently too high and should be the lowest in the world.
