What's driving up the 30-year Treasury yield?

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**Kai Rizdal** (1:32)
In which the program is about the economy yet to come. From American Public Media, this is Marketplace.
In Los Angeles, I'm Kai Rizdal. It is Wednesday today, the 22nd of July. Good as always to have you along, everybody. Our tour through the macro economy begins today with two numbers. The first is 30 That's in years, and it is specifically the 30-year treasury, the federal government's long bond that pays you back principal and interest in, just like it sounds, 30 years. The second number is 5 That's in percent, and it's the yield, the interest rate that the 30-year carries today. It has carried, in fact, 5% or higher for 27 days, the longest it's been that high since 2007
You'll not be surprised to hear we didn't pick those numbers out of thin air as a place to start today because, as Marketplace's Sabri Benishor explains, most of the time, when something like this happens, the bond market is trying real hard to tell us something.

**Sabri Benishur** (2:44)
I don't know if this has ever happened to you, but one time, my old Jim was like, hey, how would you like to prepay your membership for two years in advance? And I was like, no, why would I do that? And they were like, well, we'll give you a really good discount. And I was like, well, it better be one heck of a discount because what if you shut down? So I didn't do it. And lo and behold, the Jim went bankrupt a year later.
30-year bonds are like my shady old Jim, not the shadiness or the bankruptcy, but the fact that they ask you to lock up your money for a long time.

**Steven Lightley** (3:13)
You tie yourself up for 30 years, you're locked in.

**Sabri Benishur** (3:16)
Steven Lightley is global co-head of bond ETFs at BlackRock.

**Steven Lightley** (3:19)
And so you're going to potentially demand a premium to take that risk.

**Sabri Benishur** (3:25)
So much can go wrong in 30 years, and investors want to get paid more for that risk. And recently, they've been wanting to get paid extra more.

**Ian Shepperton** (3:34)
Yields have been rising, and that's a signal that markets are becoming uncomfortable.

**Sabri Benishur** (3:39)
Ian Shepperton is chairman of Pantheon Macroeconomics.

**Ian Shepperton** (3:43)
First is the intractability of the huge budget deficit that the US has been running for some time.

**Sabri Benishur** (3:49)
Government debt held by the public hit 100% of GDP in March, and people are starting to wonder if they will get paid back in 30 years.

**Ian Shepperton** (3:57)
There's no plausible, credible plan to reduce that anytime soon.

**Sabri Benishur** (4:01)
Now, whilst investors have been worrying about the US government, they have also discovered they have alternatives, again, Stephen Lightley at BlackRock.

**Steven Lightley** (4:09)
All of a sudden, you have this very large issuance boom in AI that's necessary to build out the infrastructure. This is all happening at the exact same time.

**Sabri Benishur** (4:18)