According to the Congressional Budget Office’s most recent long-term outlook issued in February—before the Iran war spiked oil prices and inflation views—the benchmark yield was seen at 4.1% this year and 4.2% in 2027. The 10-year yield was expected to hover around 4.3% from 2028 to 2031, then tick up to 4.4% from 2032 to 2036.

In addition to setting the pace on other borrowing costs, yields determine how much the Treasury Department must pay in interest on the U.S. debt, which can accelerate as rates go up.

To be sure, an end to the war in Iran and lower energy costs would help bring yields back down, but that’s not the only source of upward pressure.

The economy is running hotter, and the labor market is tight, meaning higher yields represent some normalization from crisis-era lows.

The $40 trillion in U.S. debt that has accumulated as well as $2 trillion in annual budget deficits that show no sign of improving are also factors.

At the same time, other heavily indebted countries and AI hyperscalers are competing for bond investors’ capital, so auctions require attractive yields to draw sufficient demand.

Then there’s the geopolitical environment. The recent wars, trade friction, and disasters have produced such frequent shocks that they are no longer seen as one-off events but a sign of a less stable world. That risk gets priced into yields too.

Add it all up, and the future looks more expensive. The Committee for a Responsible Federal Budget estimated that if yields remain more than 80 basis points over baseline projections, the U.S. will spend $2.7 trillion on annual interest payments by the end of the decade—more than Medicare or Social Security retirement benefits.

“The real threat is the debt spiral. If interest begets debt, and debt begets interest, eventually debt will spin out of control. A fiscal crisis, once unthinkable, is now a distinct possibility,” Maya MacGuineas, president of the CFRB, said on Monday.

The budget watchdog and others have been sounding the alarm for years about the debt and deficit. But the Treasury market’s rapid deterioration is now alarming those who previously downplayed the risks.

The 10-year yield has jumped a full percentage point since right before the Iran war started in late February and a half point in the past two months alone.

Market veteran Ed Yardeni, who coined the term “bond vigilantes” to refer to traders who protest huge deficits by selling off bonds to push yields higher, had maintained that yields of 4% to 5% are a normal range for a robust U.S. economy.

As yields surged over the summer, he was unfazed, saying there was still no sign that the bond vigilantes were revolting. But that’s changing.

“We will worry about a debt crisis when the bond market worries about a debt crisis,” Yardeni wrote in a note on Tuesday. “We are starting to worry now that the 10-year US Treasury bond yield may be on the verge of breaking out above 5.00%.”

Jared Bernstein, who served as chair of the Council of Economic Advisers during the Biden administration, has similarly sounded more like a debt hawk than a dove.

In a New York Times op-ed on Monday, he noted that has wasn’t an alarmist about the national debt for years and even criticized those who called more budget austerity.

But the math has changed, he Bernstein explained, pointing to rising interest rates, the massive deficit, and the lack of will from either party to tackle the problem.

“My point here is not to go through the relative merits of the different ways to stop digging,” he wrote. “It’s to say that even though I can’t tell you the day and time when the fire will ignite, I can tell you that we’re getting closer. And doing so at a rate that even this nonalarmist finds alarming.”