Marketplace - Long-term bond yields hit a long-term high

Episode Date: August 13, 2026

The government is selling 30-year bonds with interest rates at a quarter-century high. We talk with Greg Ip at the Wall Street Journal about how that could be a warning from investors over stubborn inflation and mounting debt. Also in this episode, we look at how energy prices shape the Producer Price Index, rising prices for retailers, and coal slipping as an energy source, before diving into infrastructure with a look at Puerto Rico’s water crisis and solar panel installation in Ann Arbor, Michigan.Every story has an economic angle. Want some in your inbox? Subscribe to our daily or weekly newsletter.Marketplace is more than a radio show. Check out our original reporting and financial literacy content at marketplace.org — and consider making an investment in our future.Read the stories in today’s episode:Inflation cools for producers in JulyHow small business owners are dealing with rising costsCoal still behind natural gas, renewables in electricity productionHow one restaurant is navigating Puerto Rico’s water crisisFree solar panels and home batteries? Ann Arbor's trying it out

One single number to start things off today about, oh, I don't know, the future of this economy? From American public media. This is Marketplace. In Los Angeles, I'm Kyle Rizzdahl. It is Thursday, today the 13th of August. Good as it always is. To have you along, everybody. We're going to do something a little bit different to get going today.

I'm going to give you a number. Then Greg Ip is going to tell you what it is and why it matters. Greg is a columnist at the wall. Street Journal, also one of our Friday regulars. Hey, Greg. Hey, thanks for having me, Kai. All right, 5.216 percent. What was that? What is that? So, Kai, that is the interest rate that the government will be paying on 30-year bonds that were sold at auction today. And the reason that matters, it's one of the highest rates. In fact, I believe it is the highest rate that the government has said that it will pay on a newly issued 30-year bond in almost 20 years. And I suppose that as tax

pairs, that's the kind of thing that's kind of bother us because we have a lot of debt. And every time these rates go up, it means we have to pay even more interest to service that debt. We will get on to the debt in just a moment. But one imagines that what this is saying is contra Chairman Warsh, rates are going to be higher for longer, yes? Right. So Chairman Warsh, Chairman of the Federal Reserve, it controls what we call the short-term interest

rate, the rate that's charged on overnight loans. but if you are taking out a mortgage or if you're a business that wants to build a factory, you care more about long-term interest rates. And those are set by the bond market, not by the Federal Reserve. And that's why you should care about what these 30-year bond yields are and these 10-year bond yields are. And in spite of the Federal Reserve not having raised interest rates in quite a while, those 10- and 30-year bond yields have been creeping higher all year long. And that reflects several things.

Number one, inflation is still kind of sticky. So any hope that the Fed would cut short-term rates has kind of like gone out the window, especially with oil prices going high as a result of the warner-on. Secondly, a lot of people want to borrow most of all the federal government. We just recently learned that the deficit this year will be $2.1 trillion, a very large number, which is actually $200 billion more than the Congressional Budget Office thought it would be. And third, people are just kind of worried that maybe this Federal Reserve isn't as committed to low inflation as it should be. be, and maybe this government and our Congress aren't as committed to eventually getting deficits

down as much as they should. And you put all those things together, Kai, and the lenders who buy our treasury debt want higher compensation for those risks. And every borrower in America pays the price. Let's talk about those fiscal policy makers that Federal Reserve chairs low these many decades have been talking about. And frankly, saying without actually saying the words, they're not doing their jobs, right? Our fiscal path is unsustainable. They invariably say to a person. What are we supposed to do with that as taxpayers who see now very nearly $40 trillion in national debt? We're paying a trillion dollars in interest on the debt every year.

Where do we go? Well, you know, if you're a taxpayer and a voter, you could start by, you know, asking your congressman or your senator or your presidential candidate what they plan to do about it. Sadly, Kai, I don't think they're being asked that question. When you actually poll on this question, there isn't a lot of concerns. out there among voters about the deficit. What are they concerned about? They want their taxes to stay lower. They want the government to pay for more things, keep their Social Security nice and safe, more subsidies for health care. And then, of course, we have a war with Iran going on right now, and that's going to cost a lot of money to replace munitions. And the president wants a bigger

defense budget. So all around us, we hear people asking for lower taxes and more spending. We don't hear a lot of people asking for a smaller deficit. So until they start asking for that, it's not obvious what the political value is for anybody in Congress or anybody running for president to seriously address it. You know, we did a question and answer thing on our Instagram today. I answered a bunch of audience questions. And one of the questions was, how long until the United States enters a death spiral? And I gave a much more longer answer than this. But the short answer was, as soon as the bond market gives up on us, right? That's right. Now, not to bury the lead, we just don't know when that will happen. Right. Countries have run bigger debts relative to their economy than we have right now. And the U.S. is lucky in that we issue the world's most desirable debt. A lot of people want to own treasuries because they're very safe. And they're denominated in dollars, which is the world's most popular currency. So most economists would tell you that we can continue to run very large deficits and a very large debt for a very long time without a disaster. But year by year, we will be penalized with slightly higher, slightly higher interest rates, which,

which then we'll ripple through to everybody else. And then there is a possibility, not the probability, but the possibility that something could really go wrong. Because of all the money that we have to borrow, the treasury has to go to the market every week and ask for more money, buy more of our treasury bills, more of our treasury bonds. And if they happen to do that one week

when the world is worried about something, maybe a trade war, maybe a war with Iran or something like that, maybe they don't manage to sell all that debt and you have like a disaster in the markets. I don't think that's anybody's base, case, but when you're boring as much as we have in the world is as risky as it is, it's surely got to be something you worry about more than you used to. Greg, yep, at the Wall Street Journal.

Greg, thank you so much. Appreciate your time. Yep, always a pleasure. Thanks, Guy. Wall Street today, you're going to chuckle when I say this. New record highs. Details numbers when we get there. We got the producer price index today. Wholesale inflation cooled just a tiny bit. The core rate, that's minus food and energy, sits at 4.2%. But that whole let's not count energy thing? Really? Here's Marketplace's Elizabeth Trouval. Today was another day of softer inflation data,

says economist Ben Ayers with Nationwide. You know, beyond energy, there's not much inflationary pressure. It's disinflation, not deflation, says Stephen Juneau with Bank of America. Prices aren't falling at all, but a little bit lower price growth than what we were accustomed to. Though constraints on global energy markets are still very much a thing. That affects producers in a few ways, says Aaron McLaughlin with the conference board through higher material costs, transportation costs, and manufacturers, producers of goods have to purchase energy to power their plants. So how long will it take until energy isn't shaping inflation? Grace Swimmer is with Oxford economics.

Given the uptick and energy prices at the start of August, we kind of would expect to see some of those pressures still remain. She says it'll take longer to get down to pre-war levels. There will be, you know, a slight lag between energy prices coming down and sort of, you know, further deceleration in that transportation and warehousing sector. And of course, there is always the risk of a secondary shock, Aaron McLaughlin again. Really, what we've seen in the last year or two is just a rolling environment of shock, right? This sort of Iran war shock. Before that, we had the tariff shock.

It's hard to completely count out another inflationary shock, like a hurricane being just around the corner. I'm Elizabeth Troval for Marketplace. The big thing about producer prices, for those of us in the consuming public, is what they mean for retailers and for what consumers wind up paying. Marketplace's Stephanie Hughes has that one. At Tocterman's Fishing Tackle in Baltimore, you get hit with a bunch of smell. as soon as you walk in. You'll see more garlic. You'll smell like shrimp. Deanna and Tony Tocterman own the store.

Those smells come from gels and sprays that go on fishing lores. And some of those lores are getting more expensive. Tony Tocterman holds a jar filled with imitation eels. But it's not the fake eels that cost more. It's the plastic jar they're in. The price on getting the material to make this jar has gone up considerably. Right now, the eels go for $22. $2. Taughterman expects that'll go up by a couple bucks to cover the increased cost of the plastic packaging,

which is derived from oil. A lot of things are done because of petroleum. Transportation costs are also up. Tocterman says a lot of his suppliers are upping the minimum he has to order to get free shipping. So he's buying more of certain products to avoid paying for shipping. You can't afford to absorb that. Around the corner at Local Stitch, a brand-new yarn store, owner Natasha Jones says fewer of her distributors are covering shipping. too. And when she adds online sales later this year, she won't be able to pay for it either.

Because I don't have enough of a profit margin to be able to provide free shipping in the way that these big corporations do. Some of the wool for sale here is dyed in-house. Jones's fingers are actually tinged blue from indigo. Sometimes my cat's paws are blue as well, so. She also sells wool from other companies, and earlier this summer, she noticed that wool prices from one domestic mill increased by about 25%. We were selling this at $28 a skein, and now we have to sell it at $35 per skein. So she's offering less of this brand,

because she doesn't want to be the shop that only has expensive wool. That's just not fun. Business slows for yarn in August, but across town at the ice cream scoop shop and factory the charmery, it's the busiest time of year. Ahmed Bakayoko is wrangling a five-gallon bag

of milk, cream, and sugar, into an ice cream maker. He describes his technique. Pull it like a turtle by the neck, a bit upside down. So you control the flow. He's making a batch of tell-tale chocolate, a reference to the short story by Edgar Allan Poe, who died in case you didn't know. David Alima, the owner, has also tried out some weird flavors,

like biscuits and gravy. We were very skeptical. It would be good. And then you taste it. And you're like, I like that. Alima, who has a picture of Gene Wilder as well, Willy Wonka in his office, started the company 13 years ago. And there's a feeling of Wonka-esque whimsy in the air. But the increased cost of ingredients is real. Everything is just rising, chocolate, strawberries, you know, sprinkles.

And passing all those costs onto customers' fields... Not just rude, but impossible, you know. I mean, we have a scoop of ice cream. There's only so much people will pay for one. A single scoop currently goes for $590. One thing Alima's trying to do, sell more scoops. A couple of their five shops have extended their hours to midnight. Still, Alima says business is just okay.

It's hard when one rainy weekend makes up big dent in sales. And his goal is simply to carry on. Every year that we survive feels like a celebration. To paraphrase, Willy Wonka, you can't go backwards, we've got to go forwards. Better press on. In Baltimore, I'm Stephanie Hughes from Arkansas. Here's one from the Marketplace desk of Try, though you might, you cannot fight market forces. According to new data from the Energy Information Administration, an increasing share of our electricity is coming from natural gas and renewables, wind and solar in particular.

Coal, meanwhile, continues to decline all of that happening as C above the Trump administration tries to fight market forces. Marketplace's Caitlin, reports. Something President Trump likes to say, Clean beautiful coal, clean beautiful coal. That was at a February press conference for an executive order, prioritizing coal as a source of electricity. But so far, it's not reflected in the numbers. It's really about economics.

Michael Boyle is with the think tank energy innovation. Coal is competing against newer, cheaper technologies, renewable energy, natural gas. Natural gas surpassed coal 11 years ago. wind and solar did the same in 2024. Stanley Reynolds with the University of Arizona says solar is relatively inexpensive. Even as some of the subsidies and tax credits are being phased out, solar is still quite competitive. Price point aside, coal has an infrastructure problem.

University of Wyoming's Rob Godbey says coal power plants are kind of just eking along. They're just old and they're not dependable. The Trump administration's answer is to build new ones. but we've yet to see a utility commit to that. Political cycles kind of go in four-year cycles and so on, whereas utilities make their investment decisions over, you know, 30, 40-year time frames. As power demand grows, Godbe says utilities want to invest in technology that's affordable, flexible, and future-proof.

Coal just doesn't win on any of those three fronts. Both Godby and the Energy Information Administration expect natural gas and renewables to keep building their lead over coal next year. I'm Caitlin Tan for Marketplace. Coming up. I signed up right away because I've been wanting it for a long time. I'm the first one in the neighborhood to get it put up. First mover advantage right there, gang.

First, though, let's do the numbers. Dow Industrial's up 69 points, about a 10th percent, 53,839. NASDAQ added 214 points, 8 tenths percent, 26,803. S&P 500, up 50 points, 6 tenths percent. 7799. Renewables, you say? G.E. Vernova rose 9 10%. Today. Next Era Energy. Climbed almost 310%. Brookfield Renewable. Increased about 2.5% right there. Bonds up. Healed on the 10-year T-note down. 4.64%. You're listening to Marketplace. I'm Kai Rizzdal. Today is turning out to be infrastructure day on this program. Electricity a minute ago with Caitlin Tan. Kaley Wells on solar power

in just a second. Now, though, we're going to do water. Puerto Rico is in the middle of a serious drought, which last week led the government to officially start water rationing. But in reality, Puerto Ricans have been dealing with water shortages for months now, a situation made worse by persistent maintenance problems. Chef Maria Mercedes Grub is one of the thousands of people just trying to get by during this crisis. We talked to her first years ago after Hurricane Maria. And then later on, she navigated both the pandemic and the inflation that followed. Now she is the co-owner of a restaurant in San Juan. It's called Sato Fino.

Chef, welcome to the program. Thank you for having me, Kai. How do you run a business, not just any business, but a restaurant when you don't have dependable water? What's that like for you? It's always just constant uncertainty. You don't know what to expect. There's supposed to be a calendar that tells you when you're going to have water.

Ever since they announced it officially, everybody is just an edge trying to see whether we can open or not based on the availability of water. Do you set up a schedule so that you're a sous chef and your dishwasher's going early and see if you have water? I mean, how does that work? Well, basically, we always have a prep person that comes in. So that person's always scheduled to come in regardless. And then they send the texts, like whether we have water or not.

And then we know how to align our shopping, our deliveries, our announcement with social media to let customers know. It's not just my staff. It's also my distributors and providers that I have. have to worry about. Yeah, and I'm sure they are in some water problems themselves. But if you don't have water at your restaurant that day, you just shut it down, right? You can't open up. Me at Satofino, we choose not to. But I do know a lot of colleagues that choose to open and just put a sign saying, bathrooms close, for example, and people just choose. So how much is this

costing your brass tax? It's got to be adding up by now. It's definitely adding up. I mean, It's the slowest season of the year. Summer is always terrible, so this is terrible timing. So there's definitely being a decrease of about at least a 30% in sales since this started happening, which is already terrible for our very, very, very, very razor-thin gross margin. Yeah, restaurants are tough businesses in the best of times. So if this is not the high tourist season, then who are your customers? And are you doing any real business at all?

Business is definitely very slim. My customers are the locals, but right now a lot of people are holding back. People are tired. They don't even have water to get ready and go out. And the morale in my team and my staff has been very, very slow. So it's just the air is definitely thick and hot right now in Puerto Rico. Yeah. How many people do you have working for you?

We have 18 beautiful people that work for us. So that's a lot of people to have to put out of work for a day or two or three. It's a lot of people. I have to do cuts. Even when we do open, I have to cut staff. And at the end of the day, you stop paying yourself so you can pay your staff. It's not something that's definitely that you can rely on on a general basis or forever. It's not sustainable.

This is going to sound like a ridiculous thing to say, but you sound very, very tired. I'm exhausted. I'm exhausted. And this is like the fifth pivot. We talked before and we talked to you about the hurricane and after the hurricane and who you are again before it was power now it's water sometimes it's both still well since you brought it up you were there for hurricane maria you went through covid this now seems like a triple whammy and and you know you've got some options and i understand leaving home is really hard but if you can't make a living

and you can't take care of yourself and your family and your employees there's a case to be made that maybe it's time a lot of portoericanos are feeling that way a lot of people are are tired of resilient. We're known for that, but it just gets exhausting. I mean, I for one, have an autistic, severely autistic son, so I can't bathe them with no water. I can't, like, take care of his basic needs when we have the situation. But there's still a little bit of fire of, like, just trying to hold onto our land, because, I mean, I do own property here. I have my own home that I saved many of years to get there, and I'm finally here, and now I feel like I'm being pushed by the island, by this situation.

When this immediate crisis is over and there's water in the reservoirs and you can turn on the tap and fill your pots and your pans in the restaurant, what's that first night going to be like? I mean, there was a little rain this week, so people were very excited. So I'm hoping that we get that excitement once we go back to normalcy, though it doesn't feel like it's going to happen anytime soon. Chef, thanks for your time. I appreciate it. Good luck to you. Thank you so much. Big power companies, electric utilities, to be precise, are definitely not loving life right now. Data centers are chewing up every megawatt they can produce, sending rates up and consumers into rages. Extreme weather is affecting reliability, and poor and deferred maintenance has caused deadly disasters. The solution, well, a solution really, to some of those problems, is what's known as local power, residential solar panels and batteries, for one example.

They reduce strain on the grid. They produce cheap power. when the grid simply can't. The downside, of course, is that installation can cost homeowners tens of thousands of dollars, unless they live in Ann Arbor, Michigan, which has started installing solar for free. Marketplace's Kelly Wells went to check it out. Bruce Shower is thrilled to show off his new panels. There's five there, and there's two or three here and two on the other side. When the city offered to put them on his house for free, I signed up right away because I've been wanting it for a long time. I'm the first one in the first one.

neighborhood to get put up. He lives with his daughter, his granddaughter, and his great-granddaughter. And there are no strangers to power outages. Michiganers have some of the least reliable electricity in the country. About a year ago, we had a blackout here, and I lost a freezerer full of meat and refrigerated full of meat. Then last month, during one of those really bad summer heat waves, his neighborhood lost power for two days. But this isn't just about spoiled meat. Shower's daughter needs daily shots for her arthritis, and they need to be refrigerated. Before the panels were installed, a power outage that long could have been devastating. But this time, Shower's granddaughter, April Adkins, says,

battery kicked on, and we had power. Our medicine was saved. Our food was saved. It was a godsend. It was amazing. The God Send has a name, the Ann Arbor Sustainable Energy Utility. The city's residents voted to create it a couple years back. Shoshana Lensky is the utility's executive director. Having the power actually produced in our community is really valuable for resiliency. This utility doesn't replace the giant electric company that serves the city.

It's supplemental, funded for now by government grants and the city budget. In addition to solar panels and a battery, residents who need insulation or a new roof get that too, also for free. The catch? They don't own the panels or the batteries. they just pay a monthly fee for the privilege of having them. It's like any other utility, we own the generating assets and residents buy the power or the service and the benefits of it. And if there's, say, a massive heat wave, the utility can pull energy from your battery to lighten the load on the grid and prevent an outage. Lensky says this costs households about $600 a year, but it cuts electric bills by $700 to $1,000 a year. And once the grants and city funds run out, ultimately the long-term goal of the sustainable energy utility is to be self-funding through the collection of rates.

Right now, this is just a pilot project in one neighborhood of Ann Arbor called Bryant. Installation started in June and already about a fifth of residents have signed up. They love it for a bunch of reasons. Miles Birchell is the EV-loving environmentally conscious type. Charging a car alone off of just energy generated from the sun would be great. Just having the system and being able to get green energy is important for us, as think, as well. Monica Carter is a landlord with 10 homes in Bryant.

There's no upfront costs out of my pocket. There's no upfront costs out of my tenant. So it's a pure win for my tenants. I'm able to provide affordable housing. The majority of residents in Bryant are low income. A third of them count as energy burdened, meaning they spend up to a third of their income on utility bills. And Bruce Shower loves the reliability.

The fridge keeps running, and he doesn't have to fret about his family. I'm 80 years old. I might go in the next couple of years, you don't know. And my daughter or granddaughter don't have to worry about this kind of stuff. It's taken care of for them when I go. So it gives a lot of worry off my mind. Utility officials hope once this pilot project is done, that they'll be able to expand the program to the whole city. In Ann Arbor, Michigan, I'm Kaylee Wells for Marketplace. All right, we've got to go. Sometimes it's show. is just too short.

You know, our daily production team includes Andy Corbyn, Mika Ellison, Maria Hollenhorst, Sarah Leeson, Sean McHenry and Sophia Taranzeo. Well, Story is the supervising senior producer,

and I'm Kai Rizdal. We will see you tomorrow, everybody. This is APM.