Benign or malign reasons for the rise in long-term U.S. interest rates?
A word of caution is needed on the argument that rising Treasury yields reflect a stronger economy that will in due course pay for the public deficit. Deficits are aggravated by higher interest rates. And it remains a strong presumption that AI’s effects on productivity and growth will outweigh the revenue shortfall from tariffs and the tax exemptions in the One Big Beautiful Bill Act passed by the Trump administration in 2025.