The 10-year Treasury yield hit 4.69% on May 24, its highest level since January 2025. The 30-year yield punched through 5% to reach 5.12%, a number investors haven’t seen since 2007. For President Trump, heading into midterm season with borrowing costs at multi-year highs, the timing could not be worse.
A 50 basis point problem
Since late February, the 10-year yield has climbed more than 50 basis points, making the cost of borrowing money for the US government meaningfully more expensive in about three months.
Tensions around the Strait of Hormuz, the narrow waterway through which roughly a fifth of the world’s oil passes, pushed crude prices above $100. Higher energy prices feed directly into inflation expectations, which in turn push yields higher. A reported $200 billion Pentagon funding request tied to potential war-related expenditures adds fuel to an already blazing deficit fire, alongside a projected $2 trillion deficit.
Late May brought a brief reprieve. Optimism around peace talks with Iran eased yields back to the 4.47% to 4.56% range.
