US 10-Year Treasury Yield Tops 5.3%, Highest in 24 Years
10-year Treasury yield climbs above 5.3% to a level not seen in 24 years
The 10-year Treasury yield has climbed above 5.3%, a level not seen in 24 years. Hacker News commenters debate the fiscal implications, with one arguing the US must balance its budget or face choking on interest payments or devaluing the dollar. They see the problem as a revenue issue, not spending, and doubt taxing the rich alone can close the gap, suggesting government healthcare payments as a starting point.
I'm no fiscal conservative, but the US federal government absolutely needs to balance its budget. Otherwise, it's bound to either choke on interest payments, devalue the dollar, or both.
- petcat
You want to see what's really bad, a train wreck in slow motion, just look at what France is doing.
They've been subject to EU Excessive Deficit Procedures for multiple years, must bring deficit-to-GDP ratio from ~5.8% down to 3% within 3 years despite virtually no GDP growth and complete political and societal paralysis about reducing any public benefit or welfare whatsoever.
ECB will most likely get involved after 2029 to start austerity measures. You can predict how that will go over with the French public especially if Le Pen takes the presidency, which looks likely.
Very tough times ahead and the EU is facing a critical point about its future.
- missedthecue
In 2026, entitlement spending + interest expense will be over 100% of federal tax revenue.
That's before the military, foreign aid, and everything that starts with "Department of"
- tokioyoyo
My knowledge of new-gen-econ is pretty subpar, but isn't the strategy of US "don't dare to bet against us, we're writing new rules of the game"? It feels like all governments are acknowledging "letting it rip will suck for everyone, so why would we even bother". Normal monetary policy has been thrown out of the window, and every large state bank has stated it very openly throughout the wars that have started in this decade. And this leads to a lot of state-level financial backdoor discussions, deals and "stuff" that I'm not knowledgeable enough to even think about.
Wild times. Maybe it's information overload, since it probably happened in the past as well. But being bombarded with implications of these changes left and right is kinda weird.
- GenerWork
The primary issue is Social Security. It’s the biggest driver of spending, and nobody wants to do anything to cap its costs such as means testing or straight up lowering the amount it can pay out.
As for the people that will inevitably bleat about how this is just horrible and we need to lift the cap on taxable SS income, that wouldn’t solve the core problem either unless you pair it with spending caps or cuts.
- kristianp
Howard Marks' take on bond yields: https://www.oaktreecapital.com/insights/memo/shall-we-repeal...
- gradus_ad
Stocks keep marching higher. And it's not irrational. Because the only way out of this mess (debt with high rates) is inflation.
- state_less
It probably doesn't help rates to spike oil prices by starting a(nother) war of choice in the middle east while inflation is already running hot. Eventually you get demand destruction and outstanding debts don't look so good.
- whatever1
All countries somehow are struggling at the same time. I don’t think we have seen something like this in the recent history.
Maybe we collectively just over-lend at very high interest rates and the real economy cannot anymore catch up with the promises?