Thirty-year Treasury yields rose above 5.3% on August 18, their highest level since 2007, amid a global bond market retreat.
Housing starts, a gauge of new residential construction, dropped 12.4% in July from the prior month, and were down 13.5% from the same month in 2025.
Bond supply is pushing up long-term yields
Competition for capital is fierce, with prices to match. Global bond markets are awash not only with reams of government debt, the consequence of towering deficits, but also issuance from technology titans funding the AI boom. Long-term U.S. Treasury yields have adjusted accordingly, with the 30-year reaching 5.3% on Tuesday, the highest since 2007. With Washington and Big Tech showing no signs of pulling back, consumer credit demand is most likely to suffer from rising costs. A disappointing home-buying season indicates it’s already happening.
The White House seems aware of the risk that the government, corporations or consumers will eventually have to blink. Yields dropped back somewhat on Wednesday, after the Treasury Department said that it would increase repurchases of longer-term bonds. It’s a sign of Secretary Scott Bessent’s increasingly hands-on attitude, after intervening to stabilize the yen earlier this month, potentially forestalling a sell-off of $1.1 trillion in U.S. debt owned by Japanese holders.
Tech debt issuance is adding to the pressure
Rampant issuance may test his resolve yet further. To fund a data center building spree, Amazon.com, Alphabet, Meta Platforms and Oracle issued about $194 billion of bonds in 2026 through July 7, up 79% from 2025’s full-year tally, per Reuters. The long-term government debt outlook, meanwhile, has worsened as the war with Iran has lengthened, putting pressure on energy prices and leading to requests for trillions in new defense spending. Ever-rising supply will inevitably strain bond prices: yields demanded by investors in tech debt have also risen.
Higher borrowing costs are hitting consumers and housing
Households are caught up in the deluge. Interest rates on mortgages tend to move with long-dated Treasurys. As government financing costs have climbed, the average cost of a 30-year home loan has risen to around 6.7%, after falling just below 6% prior to joint attacks by the U.S. and Israel on Iran in February.
The story is similar for other consumer credit like car loans, but it’s been a particular crimp on new mortgage originations. The slowdown flows to other parts of the economy: new residential construction fell 13.5% in July compared to the same month in 2025, a blow to homebuilders. In turn, retailers Home Depot and Lowe’s both said in earnings reports this week that diminishing demand for new projects is hurting sales of their tools and supplies. If hyperscalers and the U.S. government keep hogging the debt trough, consumers will struggle to stick their noses in.
TLT•
