September 29, 2026—U.S. borrowing costs climbed even further on Tuesday, as the yields on the 10-year and 30-year Treasury bonds rose to 5.26 and 5.59, respectively. That brings the 30-year bond to the highest level since 2002.
The rising yield not only raises the interest payments on the U.S. national debt of $40 trillion, it also makes borrowing costs higher for consumer loans on mortgages and cars. Today, the average interest rate for a 30-year fixed mortgage is 7.25 percent. That is up a full percentage point in a year. Lenders typically use Treasury’s 10-year note as a baseline for credit vehicles.
Surging sovereign debt has fueled a sell-off in long-term debt, despite efforts by officials to calm markets. Investors are looking elsewhere, including in stocks of AI-driven companies and foreign markets.
China Builds Out Bond Market
Meanwhile, China is working harder to attract foreign investors and gain traction. In August, William Sandlund and Ian Smith reported in the Financial Times that Beijing is building up its bond market infrastructure to attract foreign savers. Hong Kong serves as a key asset for China, with its well-established stock exchange. China’s currency, the Renminbi, still makes up a relatively low share of foreign exchange reserves, 1.99 percent, according to the International Monetary Fund.
In comparison, China’s long-term debt pays far less. In August, for example, its 10-year bond paid 1.7 interest.
But some investors prefer China’s debt, and PIMCO’s Stephen Chang is a lead advocate of what he calls a “calmer market” for safe holding. PIMCO is now directing its clients to turn to China for diversification, according to reporting by SCMP. As one of the world’s largest investment firms, with $2.3 trillion of assets under management, that’s a significant development.
