U.S. debt rises sharply as Treasury yields spike

In the United States, stock markets experienced significant declines due to rising Treasury yields and concerns over mounting national debt. On May 21, 2025, long-term Treasury yields surpassed the critical 5% mark again following softer demand in an auction for new 20-year bonds, culminating in the three major stock indexes posting their worst performance in a month. The Dow Jones Industrial Average faced an 817-point drop, or nearly 2%, while the S&P 500 and Nasdaq followed suit. This decline was driven by heightened worries over the U.S. government's increasing debt levels, as highlighted by a Moody's downgrade of the U.S. credit rating earlier in the week. The Treasury Department reported the national debt at an alarming $36.2 trillion, which raises serious concerns about the future economy and lending costs for consumers. Higher Treasury yields generally denote increased borrowing costs, contributing to rising interest rates for mortgages, credit cards, and other loans. Consequently, investors reacted by retreating from stocks and looking for more lucrative bonds, thereby affecting stock prices negatively as the market inches toward another critical threshold. The current economic environment, marked by rising interest rates and a weakened stock market, paints a challenging picture for U.S. consumers and investors alike.