- BIST10011,220-3.08%
- USD49.60+0.05%
- EUR55.68+0.11%
- GOLD4,038.70-2.68%
- INTEREST36.00%-1.00
- BITCOIN81,189-3.38%
- October 23, 202620°
- BIST10011,220-3.08%
- USD49.60+0.05%
- EUR55.68+0.11%
- GOLD4,038.70-2.68%
- INTEREST36.00%-1.00
- BITCOIN81,189-3.38%
- October 23, 202620°
Why Is the Decline in the US Bond Market Important? Financial Facts Speak
The reasons for the increase in US long-term bond yields and their economic consequences. On Federal Reserve policies, budget deficits, and market risks...
Long-term bond yields in the US rose this week, approaching 4.70% on 10-year Treasury bonds; this is the highest level since January 2025. The basis of this rise includes stronger-than-expected economic growth, continued consumer spending despite high tariffs and rising energy prices, and increased investments in artificial intelligence infrastructure. These developments have strengthened expectations that the Federal Reserve will raise interest rates rather than lower them. Additionally, market participants foresee short-term interest rates being higher in the long term, which supports the rise in bond yields. The premium demanded by bond investors to hold long-term bonds is also above recent years. On the other hand, concerns arise from the US's unsustainable fiscal path and increasing budget deficits. Tensions with Iran are increasing defense spending, while high interest rates raise the cost of government debt. According to projections by the Congressional Budget Office, debt service costs will constitute a significant percentage of GDP in the coming years. Moreover, if the Federal Reserve fails to maintain its independence, there is a risk of inflation expectations spiraling out of control and bond risk premiums increasing further. When these factors combine, warnings are issued about the possibility of sudden and sharp movements in financial markets.
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