Interest rates climb as inflation and deficits rise under Trump

Since Trump returned to office, the 30‑year Treasury bond rate has risen by roughly three‑quarters of a percentage point, reaching its highest level since 2002. The increase has been concentrated in the last several months, marking an unusually rapid climb for the typically slow‑moving Treasury market.

The rise in rates reflects a combination of inflationary pressures, tariff hikes in spring 2025, and the war against Iran that pushed oil prices higher. These factors, along with a projected $1.2 trillion deficit over the next five years and additional $2.2 trillion from new policy promises, have boosted investor demand for long‑term debt.

The term premium, which investors demand to lock in long‑term Treasury bonds, has risen as foreign central banks like China and Japan reduce their holdings and the Treasury Department intervenes in the market. While stock prices hover near record highs, AI‑related stocks have slipped more than 5% from their peak a month ago.

Read the full story at stevenrattner.com.