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

Episode Date: July 22, 2026

The yield on a 30-year Treasury bond has been hovering above 5% for a couple weeks — the longest stretch since the Great Recession. One reason is Treasury bonds are competing with Big Tech debt. We’ll explain, with help from one reporter’s shady gym membership deal. Also in this episode: AT&T attributes strong earnings to service bundles, a customs broker updates us on shipping logistics amid tariff changes, and Kai explains why Fed economists want to keep inflation expectations "anchored."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:30-year Treasury yields stick above 5%China's consumer economy is losing steamAT&T's service bundles make for an earnings boonInside the "tariff whirlpool" with a brokerage managerWhat “anchored inflation expectations” mean for the Fed

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Good as always, to have you along, everybody. Our tour through the macroeconomy 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, 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 percent 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 Supreme Beneshaw explains, most of the time when something like this happens,

the bond market is trying real hard to tell us something. I don't know if this has ever happened to you, but one time my old gym 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 like what if you shut down. So I didn't do it. And lo and behold, the gym went bankrupt a year later. 30-year bonds are like my shady old gym. Not the shadiness or the bankruptcy, but the fact that they ask you to lock up your money for a long time. You tie yourself up for 30 years, you're locked in. Stephen Leipley is global co-head of bond ETFs at BlackRock. And so you're going to potentially demand a premium to take that risk. 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.

He yields have been rising. And that's a signal that markets are becoming uncomfortable. Ian Shepardson is chairman of Pantheon macroeconomics. First is the intractability of the huge budget deficit that the U.S. has been running for some time. 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. There's no plausible, credible plan to reduce that any time soon. Now, whilst investors have been worrying about the U.S. government, they have also discovered they have alternatives. Again, Stephen Leipley at BlackRock.

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. Tech companies are offering high-paying long-term bonds of their own that are competing with the governments. Leslie Falconio is head of fixed income strategy at UBS wealth management. Pension funds, insurance companies, asset liabilities manager, you know, they love these yields that we're seeing. So long-term investors have worries, they have options, and they are out here yelling that they want higher yields. Now, 30-year yields don't influence mortgages or car loans the way 10-year yields do. But the thing about the long-term is that after a while, it becomes the now, and so may higher rates.

In New York, I'm Sabrina Beneshaw for Marketplace. Wall Street today, or maybe market-based capitalism more broadly, today bond yields were up, as we've discussed. Oil was up, geopolitics being what it is. Stocks? Nope. We'll have the details when we do the numbers. There was a data point out from China's main statistical agency last week that is raising some eyebrows. Growth in the world's second biggest economy is slowing. 4.3% in the second quarter that is down from 5% in Q1. Yes, Chinese data, so grain of salt.

And but when you dig down a little bit, there are some reasons to be worried, both for China and for the rest of us. we have called Adam Posen to talk things over. He's the president of the Peterson Institute for International Economics. Adam, it's good to have you back on the program. Thanks, Guy. Glad to be with you. So in a nutshell, in layman's terms, bearing in mind that GDP report out of Beijing last week, what is going on over there that it is slowing? I mean, it's the second biggest economy in the world.

It's a big deal. It's a big deal. And it's not just slowing. It's slowing after being slow for quite some time. They've got a bunch of domestic consumption that's very weak and is getting weaker, and they've got a small business sector and private sector outside of tech that's not investing. You take away the housing boom that they had a few years ago. It's not much of an engine for the world's second biggest economy. Yeah, so the housing boom we've actually talked about before on the program.

They had a big housing and a property crash, and there's a big overhang. Talk to me, though, about that thing you said, domestic consumption, which in plain English, is consumers not consuming over there? Why does that matter? Why is that important? Consumption makes a smaller part of the Chinese economy, than in the U.S., but it still makes up 40, 50 percent. And some people would say it's totally down to the real estate bubble that all these people had invested in houses or condos or unbuilt condo houses that are now worthless. But generally, historically, household balance sheets are not the only thing that drives that. So what I've argued for a few years now, and I think this bears out, is that people in China are fundamentally scared that their property can go away, that their jobs can go away. And particularly if you look at the youth unemployment, I mean, China's measured youth unemployment is 18%.

But that's after they stopped collecting the data for a few months to, tried to make it look less bad. Many people think the youth unemployment is higher than that. The future looks pretty grim, and so people are saving a lot more. Got it. And you mentioned small businesses, too. Talk to me about them. Well, part of the miracle in the 80s, 90s into the 2000s in China was this enormous growth of small business. And those people essentially borrow from other members of their family to make investments, and there's very little separation between what's household consumption and what's a small business. So when they go down, they tend to go down together, and that's

what we're seeing. And so they keep pumping money into the state-owned enterprises. They keep pumping money into the tech firms, but there's this whole vast share of the Chinese economy that's flat or shrinking. You mentioned the miracle that was a Chinese economy in the 80s and 90s. A huge part of that obviously was growth in manufacturing and has been more recently growth in technology, right? They're making more EVs than almost anybody in the world. And they're exporting, you know, enormous amounts of stuff. Is that not enough to stimulate and drive the Chinese economy then? Simple answer is no. Even with this enormous manufacturing sector, even with cramming exports down the throats of the rest of the world, they're not seeing the rise in the

and living standards and real incomes because they're competing on doing cheap stuff. You can produce an awful lot of EVs, and what you're essentially doing is grafting one transistor onto one battery onto a metal box. It's not like, you know, hand-finishing autos in the Ford assembly plants 100 years ago. It's not high labor.

Right. my my usual attempt at making this relevant to to the everyday consumer is to point to some person in like a tumois, Iowa and why they should care. But let me broaden that, right? Because as I said at the beginning, and as you have pointed out many times on this program, China is an enormously important part of the global economy. But if I'm in Atama, Iowa or small town France or, you know, out someplace in Africa, Why do I care that the Chinese economy is slowing after a period of slow growth? I think you care for two or three reasons. The first reason is even if it's the export boom is not enough to save the Chinese economy on its own.

It is enough to do a lot of damage and cause displacement of workers in the French or the German or the American car sector. It is enough to do a lot of displacement of workers in soybeans. and other things that the U.S. exports. If you have a weaker Chinese economy, they're just buying less stuff. The second thing is a Chinese economy that's weaker and that's saving so much more ends up putting a downward pressure on prices throughout the world.

And some parts of that are good, right? It means more purchasing power. But this deflationary pressure brings down the value of other things in the world, and it leads to various forms of unfair competition. Let me bring it home with this. Is there a way, you know, President C and his minions

have the great luxury of a nominally a command economy. Can they stimulate? Can they make this get better simply by force of macroeconomic will? No. It partly depends on why you think the economy is so flat. If it's due to the overhead, of the dead property sector, they can put in some stimulus and partially offset it, but until they

clean that up, it will work. Even more so, if you're from my point of view, and it's the people just don't trust the future, they don't trust the security of their property, then they're not going to respond to the stimulus at all. Adam Posin is the president of the Peterson Institute for International Economics. Adam, thanks a bunch. I appreciate your expertise. Thank you for having me. I'll tell you what, American Telephone and Telegraph is having a moment. AT&T announced second quarter earnings today.

Expectations were beat. $31.5 billion in revenue, 100,000 more new phone subscribers than analysts had been guessing, and a record 646,000 new people using its Internet services. Marketplace's Kelly Wells is on that one. The 140-year-old companies had a couple wins at once, says Cameron Chow. he's senior director analyst with Gartner. The first, they've added lots of people. AT&T bought Lumen's fiber internet business last year.

That integration allowed them to add immediately a million subscribers and over 4 million locations to their footprint. And the second, says Chow, they've had fewer people leave. Because the turn rate's much lower than your typical telco industry. That's thanks to a strategy called bundling. That's when the company offers deals to get clients to sign up for their phone and internet services. It's really about cross-selling within their install base.

Dan Ives is partner and senior managing director at the banking and research firm, Yorkville Ives. We're seeing the consolidated landscape play out, and the bundling is one of the biggest Swiss Army-knife opportunities that they have. Because it makes life simpler for customers, and it makes it more difficult to leave. So, yeah, it's been a good quarter, but Craig Moffitt says AT&T is doing about as well as it was 15 years. years ago and 30 years ago. He's co-founder and senior analyst at Moffat Nathanson. Over the long term, AT&T hasn't shown that it can actually invest at above the cost of capital. Internet service has obviously exploded since the mid-90s. Cell phones have evolved into little supercomputers today, and yet... The telcos really haven't enjoyed much of that economic growth.

They are the network builders, and the wealth is being created by the companies that ride on the networks. The hope, Moffitt says, is that bundling will earn AT&T a bigger slice of that growth, but it can only do that in a fraction of the country right now, and adding more service areas is expensive. I'm Kaylee Wells for Marketplace. Coming up. I don't like boats. Water scares me. Better get your sea legs. Quick, too. But first, let's do the numbers. Dow Industrial's down six points. We'll call that even. Finished at 52, 2,218. The NASDAQ subtracted 146.6.6%. 25,690. The S&P 500 down 10 points, just over a 10th percent, 74 and 98. Kelly was just telling us about AT&T's very good quarter. Tigger symbol T. Dialups

3 and 6 tenths of 1%. Today. A rival Verizon, brightened just shy of 1 and 2 tenths percent. T-Mobile found about a tenth of 1%. Oil, six-week highs, gang. Brent Crude, two and nine-tenths. West Texas Intermediate added one and a half percent. Oil companies, they just rose in lockstep as that happens. As it goes, as it happens, I don't know. Exxon Mobil increased 1 and 8 tenths percent. Chevron ascended 1% on the day. Bonds fell.

Yield on the 10-year T-notes. This is the 10-year now. 4.66% you're listening to Marketplace. This is Marketplace. I'm Kai Risdahl. The thing about doing a tariff story, as we are about to do, is that there is a swirl of, numbers and acronyms you have to get up to speed on to know what's going on.

For example, there are Section 122 tariffs, the ones the Trump administration put in place after his Tariff-Paloosa of last April was struck down by the Supreme Court. They expire on Friday. There are Section 301 tariffs on Brazil that the president announced last week. And a couple of days ago, there were those 50% tariffs on Canadian imports imposed under Section 338 of the Smoot-Hawley Act. Yes, that smooth holly. So we have done what we usually do when we want to understand what the tariff economy is like deep in the heart of it.

We've called Gretchen Blow. She's a customs brokerage manager at Logistics Plus in Erie, Pennsylvania. Gretchen, good to talk to you. Good to be here. I am going to ask what lawyers I think would probably call a leading question. But my recitation a minute ago of all the coming and going and towing and froing of tariff policy, I suppose you'd say, sounds like chaos, me, we're back in it. What does it sound like to you? That's a pretty good description. So how does that manifest in your day-to-day? I mean, are your clients and customers calling you and

saying, what is happening? Well, yeah, we have a lot of requests for tariff quotes, you know, to get the entire landed cost of a shipment. And as it stands, the 25% on Brazil imports started today. It's kind of overlapping with the 122 tariffs, which expire on Friday. We've heard through different sources that it could be 10% for countries where a deal was negotiated, 12.5, where a deal was not negotiated. And then we've also heard 20% across the board. And now we have 50% tariffs coming up with Canada. That one was a total and complete surprise. So it has been chaos. This is a serious question. Where do you go to get the definitive truth? Because this is a bottom line issue for your clients and your customers. It kind of depends because sometimes

the proclamations and the executive orders issued by the White House, they will have the commodity classification of where things apply. Sometimes they don't. And we have to wait for a CSMS message, which is issued by customs that that. Okay, wait. CSMS. Is that some fancy federal thing that gives you information? It's a subscription we have with customs and border protection to give us updates. But we really have to wait until we get something directly from customs to see what's going on. And a lot of times that's not quite quick enough for the importers we work with. So it leads to a lot of questions. Yeah, I bet it does. When you have conversations with your colleagues in the in the logistics business, not only across this country, but all over the world.

I imagine you have professional contacts. What do they say to you? Well, as an example, we have an office in Northern Ireland, and they send a lot of farm equipment and tractors and whatnot and high lifts and that type of thing to the U.S. And where before the steel portion or the aluminum portion, whatever metal portion, was one tariff, And then the rest of it was a different tariff. Now there's a whole thing where if it's over 15% of the metal, it would be classified as the metal and the 232 tariffs would apply.

But in some cases, some of them are 50% and some of them are 25%. So I got told by our manager there that I was talking nonsense would explain this to. I mean, we have a good relationship. He wasn't being insulting at all. But yeah, he just said, how do I? I explain that to my customer, and I said, I don't know. I'm sorry. And then, you know, that's an English-speaking office. Oh, yeah, of course. And we deal with, you know, Italian agents, and we have offices in Spain and Germany and whatnot. And it's really hard. There's a lot lost in translation,

even when you're speaking the English language, let alone when it's really getting translated. Yes, there is. Have you ever seen anything like this in your life? No. Absolutely. not. There's not a strong enough word. Unprecedented is just too weak a word for this. And you're not able to give your clients any look. Here's what's coming down the pike, right? It's just every morning you wake up and you check the news and you're like, oh, here you're going. Exactly. Because we've been telling everyone, well, the 122 tariffs are expiring. We don't know what to tell you. We'll be happening next week. Yeah. Gretchen Blau, Logistics Plus, Newry, Pennsylvania. Gretchen, thanks very much. I really appreciate your time.

Thank you. This has been, in case maybe you hadn't noticed, a quiet week in economic data. And the Federal Reserve is in its quiet period before its meeting next week. So that means we've got some breathing room to go back to a speech that Federal Reserve Governor Christopher Waller gave last week at the New York Association for Business Economics. A speech entitled Monetary Policy at a Crossroads, by the way. But a speech in which there was one word repeated ten times. inflation expectations today seem well anchored inflation expectations are anchoring inflation expectations Not inflation expectations, but anchored.

Now, you being a normal person might understand it in relation to boats. I don't like boats. Water scares me. I am not a sailor. People say, hey, let's go on a cruise. Nope. Yeah, same, but their aquaphobia aside, we call those people for their economic expertise. John Vech is dean of the School of Business Management at Notre Dame de Namor University. Julie Smith is a professor of economics at Lafayette College, and Carrie McDaniel is an economics professor at Arizona State. Anchors on boats help keep you generally in one spot if waves and wind spin you around. The drift is anchored by that heavy piece of metal resting on the ocean floor.

It's what central bankers mean when they say inflation expectations are anchored. that we are going to explain today. What we're talking about is that people's beliefs about inflation might move around a little bit, but they're never going to go that far away from the Fed's 2% inflation target. We haven't been at that target. I will remind you in more than five years. The latest reading of Core PCE, the measure of the Fed watches most closely, was 3.4%. Here's Karen McDaniel at ASU.

The actual rate of inflation is important, but even more important is what we expect the inflation rate to be in the future. And that's where this whole anchoring thing comes in. As you know, because we say it all the time, where consumers think inflation is headed matters a lot for the Fed's ability to control it. If you believe, for instance, that refrigerator prices are going up, you'll be more likely to buy a new refrigerator now, thus increasing demand and pushing prices. higher and also probably you would ask for a raise to be able to afford things like new refrigerators.

It is a dangerous cycle. But if you expect inflation to eventually go back down to 2%, that makes the Fed job easier. It doesn't mean that inflation or expected inflation can't move a little bit, but what it does mean is that inflation is going to return to where it is supposed to be. So that's what it means to have inflation expectations anchored. Now, just a tortuary. torture the nautical metaphor, we start with a little bit more. What you might well ask is the heavy thing at the end of the rope that is doing the anchoring. Credibility, trust, understanding. Just the belief that the Fed will act to bring down inflation can help stabilize prices. Fed chairman Kevin Warsh has been trying to emphasize that commitment in his public statements so

far because right now the wins of this economy, like those tariffs that Gretchen Blau and I were talking about and the war in Iran and all of that AI spending, have created some stormy seas. The waves of uncertainty hitting consumers are basically causing the boat to move. And in the short term, we, that is, we consumers do expect prices to rise. The New York Fed's survey of consumer expectations last month clocked our inflation expectations over the next year at 3.7%. But if you look further out, they're not that out of line with the Fed reaching the 2% inflation target.

So markets are telling us that inflation expectations appear to be anchored. And part of Chairman Warsh's job over the next months and maybe years is to make sure they stay that way. Before he was appointed, the credibility of the Fed was really in question with a Trump appointee. I think that since he's come in, he's actually shown actions that build credibility. He has talked, for instance, about having, and this is a quote, no tolerance for persistent inflation, and he has tried to assure people he will act independently of the White House. Whether that last is an open question. It is, at least right now, the most important question surrounding the Warsh Fed,

because without credibility, without trust that the Fed is going to fight inflation when it has to, well, anchors away, right? Thanks again to John Veach at Notre Dame de Namor. Carrie McDaniel at ASU and Julie Smith at Lafayette College. This final note on the way out today, which I will preface by saying, did you see last night that an open AI, agentic AI system, hacked into a different company's systems all by itself? Everything's fine, right?

Anyway, elsewhere in our robot overlord future, Google reported profits after the bell today, alphabet technically, the first of the big publicly traded AI companies to do so. Of note, it's capital expenditures, the vast bulk of which are on data center buildouts. And remember, this is a three-month number. CapEx was almost $45 billion. Definitely not a bubble. Definitely.

Our media production team includes Brian Allison. John Fokie, Montana Johnson, Drew Jostat, Gary O'Keefe and Charlton. Thorpe Alex Simpson is the manager of media production. And I'm Kai Rizdahl. We will see you tomorrow, everybody. Oh, yeah, this is APN. I'm Amy Scott, host of How We Survive, a podcast about the messy business of climate solutions. To a lot of people, geoengineering might seem like a dangerous, outlandish way to play God.

But some are embracing this sci-fi-inspired approach as a solution to the climate crisis. We're going to launch some balloons and send them into this stratosphere. A constellation of sunshades would kind of. and even dimming of shade across the entire Earth. Investing that much in building anything in space creates a whole space economy. Listen to how we survive on your favorite podcast app.