Borrowing costs go boom

**SPEAKER_1** (0:00)
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**Kyle Rizdal** (0:32)
All right, let's toss a coin, labor market or the bond market? Heads I win, tails you lose. From American Public Media, this is Marketplace.
In Los Angeles, I'm Kyle Rizdal. It is Tuesday today. This one is the 1st of September. Good as it always is to have you along, everybody.
There is a thing that happens with the news, news in general, I suppose, but business and economic news in particular, I believe, where a story just becomes so ubiquitous, so constant that people kind of tune it out. They just stop hearing it. Tariffs, back in Trump One is a good example. Trump Two tariffs as well, to be honest. I'm a little worried though that all the bond market news the past couple of weeks is starting to fall into that category, which I get to some degree because even on the best of days, bond market stories are dense. But when globally, bond markets are kind of screaming at you, attention must be paid, attention specifically from us, the American consumer. Bond buyers around the world have been demanding higher interest rates for reasons we have been talking about for a couple of weeks now. And when rates rise globally as they are, they are going to rise here too. Attention as I said must be paid. Marketplace's Justin Ho gets us going.

**Justin Ho** (2:05)
Let's start with Germany as an example. Right now, yields on its 10-year government bonds are at their highest since 2011 Ken Rogoff, an economics professor at Harvard, says a lot of that is down to government spending.

**Ken Rogoff** (2:17)
In the particular case of Germany, they were not a high-debt country, and suddenly, they're really nervous about Russia. They're having to increase military spending.

**Justin Ho** (2:26)
More spending means more debt, and because of that, the bond market is demanding higher interest. And not just from Germany, 10-year bond yields in Japan are at their highest level since the late 90s.

**Ken Rogoff** (2:37)
The Japanese government needs to compete for funds against everybody else. Countries are not islands, even the United States.

**Justin Ho** (2:45)
And yields on US treasuries are already pretty high, which is also adding to the competitive pressure around the world, says Henry Wu with Alpine Macro.

**Henry Wu** (2:54)
So when you see yields going up in the US, and that's the biggest bond market in the world, yields in the rest of the development world follow it.

**Justin Ho** (3:01)
But there's also a feedback loop here. When yields in the rest of the world go up, that puts pressure on US treasuries to pay higher rates. Anna Chieslock at Duke University says there is a lot of competition around the world for investors' money. And since governments and companies are issuing so many bonds to cover budget deficits and pay for AI data centers, investors need to be persuaded to keep buying them.

**Anna Chieslock** (3:24)
Suppose that everybody has already eaten so much candy that they cannot take anymore. It will take a bigger sort of effort to induce them to buy one more candy.

**Justin Ho** (3:36)
And that bigger effort in this case is higher interest rates. I'm Justin Ho for Marketplace.

**Kyle Rizdal** (3:42)
Wall Street today forgets stocks or candy for just a second. Those stocks did have a lousy day. You will hear me say this again in just a little bit, but the yield on the 10-year treasury topped out at 4.8% today. That, you just got to believe me here, is high. We will have the details when we do the numbers.
Today's good news, bad news, or maybe things are fine news comes to us from the aforementioned American labor market. The number of job openings in this economy didn't change a whole lot in July, and though people are still skittish about quitting their jobs, they're at least not getting laid off more. That's all from today's job openings and labor turnover survey. And as Marketplace's Brie Benishaw reports, there is a sliver of the positive in there.

**Sabri Beneshur** (4:49)
For every person out there looking for a job, there are 1.05 jobs available, at least on paper, which is good.