The $32 trillion American bond market is delivering an unmistakable rejection of the Trump administration’s economic sales pitch. Treasury securities, which the government uses to fund its activities, are lurching through a period of rising yields with consequences far beyond trading desks.

Earlier this month, Treasury Secretary Scott Bessent tried to project control by declaring, “I am the house now.” But traders have hardly responded like obedient casino patrons, and the house is ending up with plenty of egg on its face.

The 10 year Treasury yield is trading at its highest level since the period preceding the 2007 financial crisis. The 30 year yield has experienced a similar surge, reaching its highest point since 2004.

Those bonds influence mortgages as well as auto and corporate loans, giving the turmoil serious financial consequences for Main Street, as Navy Federal Credit Union Chief Economist Heather Long has noted. Rising yields make borrowing more expensive across the economy.

Americans now face greater difficulty securing personal loans on favorable terms or refinancing mortgages without paying considerably more. The average 30 year mortgage rate has climbed to just above 7%.

That mortgage rate began rising earlier this year after the United States partnered with Israel to launch a military campaign against Iran that currently has no end in sight. The bond market’s unrest is also unwelcome news for Wall Street because higher yields can squeeze corporate borrowing and ultimately limit profits.

Bond prices and yields move in opposite directions. The continuing rise in yields shows that investors are demanding higher interest rates before they will purchase government debt, a costly vote of no confidence that Bessent has so far failed to reverse.

The financial consequences for the federal government are substantial. By one estimate, rising interest rates mean the national debt will be $1.5 trillion larger over the next decade than the Congressional Budget Office originally projected.

The Trump administration has noticed the rout and attempted to calm it. Just over a month ago, the Treasury Department announced plans for periodic bond purchases of up to $4 billion in an effort to restore confidence.

When that intervention failed to settle investors, Bessent increased the amount to $6 billion. The more aggressive effort also failed to sway a market unnerved by the nation’s $40 trillion debt mountain and anxious about inflation resulting from the war with Iran.

The spike in yields exposes Bessent’s inability to suppress them artificially and bring the situation under control. He set out to become the “nation’s top bond salesman,” hoping to generate enough demand to reduce mortgage rates and broader borrowing costs, but that strategy has fallen flat.

Bessent understands the potential force of bond vigilantes, traders who rebel against policies they consider inflationary or destabilizing. In July, he observed that “the bond market has taken out more governments than howitzers.”

Former U.K. Prime Minister Liz Truss experienced that force in 2022 after proposing unfunded tax cuts. Investors sold British bonds en masse, the resulting bond market chaos intensified, and Truss resigned after only 45 days.

Italy faced its own rebellion in 2011 under then Prime Minister Silvio Berlusconi. After he criticized his austerity driven finance minister in an Italian newspaper, doubts grew about his willingness to balance Italy’s budget by 2014, while the nation carried the euro zone’s second worst debt ratio after Greece.

Italian bond yields soon rose beyond 7%, creating a tipping point for action. Financial analyst Ed Yardeni, who coined the term “bond vigilante,” wrote at the time, “Obviously, my old friends the Bond Vigilantes have been stirred and are now attacking Italy just as the barbarians invaded the Roman Empire many centuries ago.”

Berlusconi stepped down in November 2011, with a technocratic caretaker government ready to replace him. Italy, where bond markets first developed in 12th century Venice according to Financial Times journalist Robin Wigglesworth’s book “A Fabulous Debt,” had seen a government ousted by its own invention.

A comparable change of government is not expected in the United States anytime soon. Treasuries remain the backbone of global finance and have long served as the ultimate escape hatch for investors during periods of spreading chaos, even if they have seen much better days.

Bessent nevertheless told a House panel, “The U.S. bond market — it continues, during the past month, since President Trump has come in — has been the best-performing bond market in the developed world.” He later dismissed critics as “Bloomberg Terminal bros.”

The market is not buying that swagger. Whether investors change their minds will depend on government credibility, which remains in short supply as another Middle East war continues flickering on and off.