It’s absolutely a risk premium. The market is slowly pricing in no appetite to reduce the US deficit.

https://www.atlanticcouncil.org/blogs/econographics/are-risi...

> Several factors have driven the rise in bond yields, including higher inflation expectations amid elevated energy prices following the Iran war and uncertainty surrounding a new Federal Reserve Chair. But the more fundamental concern is the US fiscal position: persistently high budget deficits have reached 6 percent of GDP, while government debt now exceeds the size of the US economy.

> In Fiscal Year 2026, which ends in September, the US Treasury is expected to issue around $2 trillion of securities on a net basis. Gross issuance, meanwhile, could reach a staggering $20 trillion according to the Securities Industry and Financial Markets Association. That gap reflects the sheer volume of debt that needs to be rolled over, much of it resulting from the Treasury’s decision under former Secretary Janet Yellen to favor shorter maturities when rates were lower and curves were upward sloping.

> US Treasury Secretary Scott Bessent has been attentive to the resulting borrowing costs and their impact on the budget deficit, which is why the Treasury has sought to limit pressure on the US bond market from foreign central banks that need dollars. During a recent joint FX market intervention with Japan, the Treasury sold euros for yen rather than dollars, avoiding transactions that would have required selling Treasuries. It has also asked the Fed to raise the limit on its Foreign and International Monetary Authorities repo facility, allowing the Bank of Japan and other foreign central banks to borrow short-term dollars against Treasuries rather than sell them in the open market, which could put further upward pressure on yields.

https://www.bloomberg.com/news/articles/2026-08-13/us-braces...

> “Investors are being asked to absorb a growing supply of government debt globally at a time when deficits remain large, inflation uncertainty persists” and the Federal Reserve is no longer a major buyer, said Michal Stanczyk, portfolio manager for the global fixed income team at Allspring Global Investments.

> “If investors continue demanding greater compensation for inflation and fiscal risks, long-term yields could move higher and away from 5% even if Treasury auctions remain well covered,” he said.

Risk premium!

> It’s absolutely a risk premium

It's objectively not–that's what CDS measure.

> higher inflation expectations

Not reflected in the data [1].

We can reasonably debate if investors should treat the U.S. as a riskier credit. But these auctions, CDS data and other funding rates for high-quality non-U.S. dollar-denominated credits (e.g. Saudi Arabia's dollar-denominated debt [2]) do not show what the article implies they do.

[1] https://fred.stlouisfed.org/series/T10YIE

[2] https://live.deutsche-boerse.com/bond/xs2747599509-saudi-ara...