Bond market sell-off spikes Treasury yields, pushing mortgage rates toward 6.7%

A sharp retreat from U.S. government debt has sent the 10-year Treasury yield near 4.8%, which in turn has lifted the average 30-year fixed mortgage rate toward 6.7%, ending an era of cheap home loans. Treasury Secretary Scott Bessent tried to calm markets by doubling the Treasury’s bond-buyback programme, hoping to prop up prices and lower mortgage costs, but the intervention is seen as a temporary fix. The underlying issue, analysts argue, is Washington’s persistent budget stalemate and refusal to curb spending, forcing the Treasury to issue more debt.

Adding pressure, technology giants are issuing massive amounts of corporate bonds to finance AI projects, competing with government debt for investor capital. Internationally, central banks in Europe and Japan have raised rates, ending the “free-money” environment that once funneled global savings into U.S. Treasuries. If borrowing costs stay high, the combination of expensive mortgages and tighter corporate credit could stall growth and trigger a recession. The episode underscores that fiscal discipline, not Treasury market-making, will determine future financing conditions.