Trump’s Iran War Harming Bond Markets, Interest Rates
S. Treasury notes climbed roughly half a percentage point since the Iran war began Feb. S.
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Interest rates on 10-year U.S. Treasury notes climbed roughly half a percentage point since the Iran war began Feb. 28, pushing mortgage rates to their highest levels in nine months
The cost of servicing the national debt has tripled since 2021 to more than $1 trillion annually, with deficits projected to continue growing
Trump told Fox News on Saturday that the U.S. “shouldn’t have been in Iran,” in an interview with daughter-in-law Lara Trump, while also claiming the strikes were necessary to prevent Iran from obtaining a nuclear weapon
As the Iran War is now in its fourth month, it’s dragging on the national and global economy, increasing interest rates and bond prices, according to the Associated Press, all as President Donald Trump said that the United States never should have engaged there.
Since the start of the Iran War on February 28, the resulting increase in energy prices globally due to the closure of the Strait of Hormuz, has significantly impacted the national economy. Interest rates on 10-year U.S. Treasury notes are up about 0.5% since February, mortgage rates climbed after a declining trend and auto sales are down, indicative of interest rates’ impact on the economy, according to the Associated Press.
When coupled with the continued increase of the national debt, there are concerns long-term pain in the market may linger as a result of the war. The cost of servicing the national debt has tripled this decade with deficits expected to continue to grow, according to the AP.
On the ground level for Americans, that means that in addition to higher fuel and food costs, they’re facing increasing barriers to homeownership, home renovations, new car purchases and paying down debt.
MoneyWatch noted that mortgage rates aren’t expected to fall any time soon under the current bond market. When combined with the impact of inflation – in addition to fuel costs increasing prices of goods, many home building and home renovation supplies are subject to tariff policies put in place by the Trump administration in 2025 – home prices and home insurance will rise while buyers may need to stretch their budgets in the process.
Should the war end, interest rates may settle down, but given that it continues to drag on, all bets are off.
In fact, during an interview with his daughter-in-law Lara Trump on May 30, Trump said the United States “shouldn’t have been in Iran,” according to Common Dreams. He then refuted U.S. intelligence that Iran was not close to holding a nuclear weapon, claiming the military struck for that reason.
By Joe O’Leary