Why US Treasury yields are rising

Sovereign bond yields have been rising sharply around the world, driven by growing concerns over US President Donald Trump's economic policies and an increasingly uncertain global outlook. In less than a month, the yield on 10-year Treasuries jumped by 50 basis points to 4.6%. And in May alone, the 30-year Treasury rate rose by 30 basis points, briefly topping 5%.

- Dambisa Moyo

At least four key factors are driving this upward trend: weakening long-term government credibility; growing doubts about the effectiveness of current US policies; deepening domestic and international political uncertainty; and sentiment-fueled market volatility.

Above all, rising bond yields reflect a profound loss of confidence in US economic policymaking (and this at a time when just 41% of Americans trust their government). In fact, while Mr Trump's "big, beautiful" budget bill is projected to increase the federal deficit by $3.8 trillion and add $3.3 trillion to the national debt over the next decade, concerns over the sustainability of US fiscal policy have been building for years.

As the United States approaches its debt ceiling, the Congressional Budget Office projects that deficit spending will reach $1.9 trillion in 2024-25 — the third highest in American history. The annual federal deficit already exceeds 6% of GDP, well above the 3.8% average of the past 50 years, and is expected to remain elevated through 2035. Meanwhile, gross federal debt is projected to rise from 123% to 135% of GDP over the next decade.