The U.S. bond market is sending significant signals to Wall Street and Washington as Treasury yields approach levels not seen in nearly two decades, potentially complicating the incoming president-elect Donald Trump administration’s economic agenda.
What Happened: The yield on the 10-year Treasury has surged more than 1% since September, nearing the psychologically important 5% threshold. This sharp increase in government borrowing costs comes as markets reassess Federal Reserve rate cut expectations amid stronger economic data.
“It’s a combination of reset expectations of Fed rate cuts due to better economic prospects as well as an increase in real rates,” says Anna Wong, chief U.S. economist at Bloomberg Economics and former Federal Reserve economist who served in the previous Trump administration.
The bond market’s reaction partly reflects anticipated Trump policies, including proposed tariffs and immigration…
