UNITED STATES – The U.S. bond market, treated by the capitalist class as one of the safest foundations of the world financial system, is showing signs of severe strain. Treasury data shows the 10 year, 20 year, and 30 year yields climbing sharply, while the 10 year briefly crossed 5 percent for the first time since 2023. The pressure extends further out the curve, with longer maturities reaching levels not seen since before the 2008 financial crisis. The selloff forms part of a broader global surge in government borrowing costs, with bond yields rising across other major capitalist economies as well. These movements in the bond market reveal the same underlying contradiction that runs through the entire crisis: the effort of the capitalist class to preserve the imperialist financial system by forcing the costs of debt, inflation, and austerity onto the masses.
The sheer volume of federal borrowing is also increasing pressure on the bond market. The U.S. now carries more than $40 trillion in public debt, while the Treasury expects to borrow more than $10 billion net on an average day during the second half of 2026. The U.S. Treasury market, the segment of the broader bond market where federal government debt is issued and traded, has expanded from around $4 trillion in 2007 to more than $32 trillion today, while annual interest payments are approaching $1 trillion.
Against this background, the Treasury has intervened directly in the secondary market by expanding buybacks of older securities. On August 19, it announced that liquidity support purchases in the 10 year to 20 year and 20 year to 30 year sectors would at least double, from $2 billion to a minimum of $4 billion per operation beginning September 9. Even these expanded purchases have provided only limited relief, with yields continuing to rise. These indicators amount to more than “technical disturbances” in financial markets. They are acute expressions of the crisis of U.S. Imperialism within the very institutions that organize its financial rule.
The bond market is where the Old State’s need for borrowed money meets the demands of finance capital. U.S. Imperialism must fund war, deportation machinery, militarization, police, prisons, subsidies to monopoly capital, interest payments, and the general costs of maintaining Imperialist domination. To do this, it sells Treasury securities: claims on future public revenue backed by the labor, taxes, fees, fines, rent, and debt payments imposed on the masses.
When buyers of Treasury securities demand higher yields, they are demanding a greater return before advancing loanable money capital to the State. In this form, money functions as interest bearing capital: a claim on future payments that appears detached from production and from labor. But this appearance is a fetish, a definite social relation which assumes the fantastic form of a relation between things. Behind the bond stands the worker, the tenant, the debtor, the student, the migrant, the prisoner, and the oppressed nations inside the United States. Behind every interest payment stands the extraction of surplus value and the political power of the State that guarantees the claim.
Because U.S. Treasury yields serve as a benchmark for much of the credit system, higher yields raise borrowing costs far beyond the bond market itself. Banks, corporations, municipalities, and households all face more expensive credit as interest rates on mortgages, car loans, credit cards, student loans, and municipal bonds rise alongside government borrowing costs. For the masses, this means higher monthly debt payments, more expensive housing, greater pressure on public budgets, and increased austerity as federal, state, and local governments devote more revenue to interest payments instead of schools, transit, healthcare, and other social needs. Higher borrowing costs also encourage capitalists to cut wages, reduce hiring, intensify labor exploitation, or raise prices in order to preserve profits, shifting the burden of more expensive credit onto the masses.
Public debt is one form through which finance capital lays claim to future surplus value. The worker produces value today, while the State pledges tomorrow’s revenue to bondholders. The bond becomes fictitious capital: a tradable paper claim on future value, circulating as if it were capital itself. The more the State borrows, the more the future labor of the masses is mortgaged to the capitalist class.
The scale of the crisis is historic. U.S. national debt has topped $40 trillion, more than doubling in less than 10 years, according to Treasury Department data. This debt was not accumulated for the benefit of the masses. It is the ledger of U.S. Imperialism: tax cuts for the capitalist class, expanding military expenditure, financial sector bailouts, infrastructure for monopoly capital, and the costs of maintaining one of the largest repressive apparatuses in the world.
The Federal Reserve added further pressure to the credit system on September 16 by raising its benchmark interest rate for the first time in three years. The Fed increased the federal funds target range by 25 basis points, bringing it to 3.75 percent to 4.00 percent, citing persistent inflation and signaling that additional tightening remains possible before the end of the year. The move came after the 10 year Treasury yield had already crossed 5 percent, a level that placed renewed pressure on policymakers to respond to inflation expectations and the selloff in longer dated government debt. Because the federal funds rate influences short term borrowing costs across the banking system, the hike raises the floor under credit conditions more broadly, affecting bank funding, corporate borrowing, consumer credit, adjustable rate debt, and the pricing of risk assets. Monetary tightening does not resolve the underlying debt problem. It redistributes the pressure of the crisis downward by raising the cost of servicing debt across the economy, especially for workers, municipalities, and indebted households.
At the same time, the demand for capital is rising from the private monopolies themselves. Global bond markets have sold off as borrowing costs rose across major economies, including the United States, the EU, and Japan. Technology monopolies building large language model infrastructure, commonly marketed as “AI,” have issued vast amounts of debt this year, while global corporate bond issuance has reached a record $4.9 trillion driven by the capitalist class’ demand for “AI” infrastructure, data centers, automation, military technology, and energy expansion.
The same monopoly capitalist class that demands a cheap credit environment also demands massive new investment in fixed capital: chips, power grids, data centers, logistics, weapons systems, and real estate. As this demand rises, capital becomes more expensive. The State competes with the monopolies for loanable money capital, and both pass the burden downward. This is a contradiction internal to monopoly capitalism. Capital demands cheap money, but its own drive toward expansion, militarization, automation, and domination increases the demand for loanable capital and pushes borrowing costs upward.
In August, nonfarm payroll employment rose by 162,000 while the official unemployment rate remained at 4.1 percent. The Bureau of Labor Statistics, or BLS, counted 7 million unemployed people, 1.9 million long term unemployed, 4.4 million people working part time for economic reasons, and 5.7 million people outside the labor force who wanted a job but were not counted as unemployed. The official unemployment rate conceals a larger reserve army of labor, which forces workers to accept worse conditions and wages. This reserve army is produced by Capitalism itself and used by the capitalist class as a weapon against employed and unemployed workers alike.
The BLS reported that nonfarm business labor productivity rose 1.4 percent in the second quarter of 2026, while output rose 1.7 percent and hours worked rose 0.3 percent. Real hourly compensation fell 3.3 percent in the quarter. This means that productivity rose while workers’ real compensation fell. The capitalist class received the benefit of greater output, while workers faced a reduced ability to reproduce their basic conditions. The labor share, meaning the percentage of output going to workers as compensation, fell to 52.8 percent, the lowest level in the series beginning in 1947. Inflation also remains elevated, with the Consumer Price Index rising 3.4 percent over the 12 months ending in August and 0.4 percent in August alone, further eroding the ability of workers to reproduce their basic conditions.
Unit labor costs, productivity, labor share, and unit profits are bourgeois categories, but they reveal the movement of surplus value. The capitalist class increases relative surplus value by raising productivity while holding down or reducing real compensation. The bondholder then stands behind the industrial capitalist, demanding interest. The State stands beside them both, organizing the conditions for accumulation through repression, debt, law, tariffs, and war.
Technocratic adjustments via debt and credit channels may temporarily extend accumulation, but they also make the entire economic structure more fragile. As Treasury yields rise, the State must pay more to borrow. As corporations issue more debt, they demand higher profits to service it. As workers face falling real compensation, higher prices, rising household borrowing costs, and austerity, the antagonism between labor and capital sharpens.
The ruling class will attempt to manage this crisis through austerity, repression, monetary discipline, and war. For the masses, the question is not whether the bond market can be stabilized for finance capital, but for what reason and to whose benefit their labor, taxes, debt payments, and social needs are sacrificed and how to crush this chain of exploitation and extraction.
