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As someone with a 401(k), I tend to prefer it when financial news doesn’t reference the 2008 financial crisis. Unfortunately, that was not to be on Tuesday: the US bond market is having a tough go of things right now, and the 30-year Treasury yield just hit a 19-year high last reached in June 2007. Other countries, including Japan, Germany, and France, also hit multi-year highs.
So what does that all mean? It sounds technical, but bond yields underlie the cost of borrowing for just about anything, from mortgages to car loans. Essentially, they’re the rate the government pays to borrow money on different time horizons (10-year Treasury notes or 30-year bonds, for example, often just called Treasuries). When investors sell government bonds, the price falls, and bond yields go up. A combination of weak demand and heavy supply right now means the problem is particularly acute.
The current shakiness in bond markets reflects the broader set of problems facing the US and global economies right now: The Iran war is dragging on with no end in sight after the US and Iran blew through a 60-day deadline to reach a more permanent peace deal yesterday, inflation is still a problem, and the national debt in the US and elsewhere is rising. Huge volumes of corporate borrowing for AI data centers in the US also play a role.
A deepening debt problem
Here’s an uncomfortable problem: Part of the reason for climbing US bond yields is investors feeling antsy about the national debt. But the higher those yields go, the more it costs the government to service that debt, and the more quickly it’s going to accrue. And the US has a milestone approaching: $40 trillion.
It’s expected to reach that mark sometime this week, the Washington Post reported on Tuesday, months sooner than expected. Shortly after that — sometime early in 2027 — the US could once again be staring down the debt ceiling, which Congress will have to raise (it previously acted last year to raise it by $5 trillion, to $41.1 trillion total).
Whenever that rolls around, it’s likely to be a major political fight, especially if Democrats win back one or both chambers of Congress this fall (unless Republicans do so this fall, as Trump has urged).
But as my former colleague Dylan Matthews wrote in 2024 (when the national debt was merely $35 trillion or so), there are very good reasons to address the growing national debt beyond the political: Not only can it weigh on the overall economy over time, but if things get really serious, it can also spiral into a debt crisis. It’s never happened in the US before, which has some things going for it that make such a crisis far less likely than in other countries. As Dylan pointed out some $5 trillion ago, though, that doesn’t mean it’s impossible.
One link for later
➨ Environmental law at risk. Trump is asking the Supreme Court to clear the way for construction to continue on his East Wing ballroom/“Military Complex,” which has been blocked by lower courts. But the case goes much further than that: As my colleague Ian Millhiser explains, if justices rule in Trump’s favor, “numerous environmental, conservationist, and historical preservation laws could effectively cease to function.”
Before you go…
- Did you know…that most pet hamsters are Syrian hamsters, native to the northern part of the country? It’s just one of many great details in this nuanced piece from my colleague Kenny Torrella, about the complicated story of Mollie, the hamster uploading his runs to Strava.
- Today’s trivia: Which Dutch astronomer theorized a cloud that constantly creates comets? (You can find this and other brain puzzles in Vox’s daily crossword. Look for the answer in tomorrow’s edition.)
- Yesterday’s trivia: Yesterday, we asked you for the title of Iran’s ruler before the 1979 revolution. That was the shah; Mohammad Reza Pahlavi was the last to hold the title.
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