Treasury Yields Jump to 4.44% on Deficit, Inflation Fears Ahead of Midterms

On June 1, 2026, the 10-year U.S. Treasury yield topped 4.44%, up from 3.95% before the Iran war began in late February, as bond markets flash an inflation and deficit warning ahead of November’s midterm elections. Higher borrowing costs are chilling housing and auto demand. The federal deficit hovers near $1.8 trillion annually, with debt service tripling since 2021 to over $1 trillion. Economists say Trump’s plans—tariffs, DOGE spending cuts, and the “Gold Card” visa—are unlikely to close the gap. The Penn Wharton Budget Model attributes 60% of the yield surge to expectations of continued hefty borrowing and 40% to Iran-war and tariff-driven inflation. Former White House adviser Glenn Hubbard warned that eroding fiscal credibility could leave the U.S. without sufficient borrowing capacity in a crisis. The bond market pressure is becoming a midterm liability for Republicans, with Democrats tying higher rates to cost-of-living pain.