IU Southeast economist: shifting Treasury yields and geopolitical tensions are raising mortgage costs and clouding hiring outlook

Dr. Uric Dufrene of Indiana University Southeast explains that investor demand for U.S. Treasuries, shifts in hiring and episodes of geopolitical risk drove notable swings in the 10-year Treasury yield between early 2025 and mid-2026. The piece traces yields near 4.8% at the start of 2025, declines to about 4.0% after April 2, 2025, rebounds toward 4.5% by July 2025, another fall to roughly 4.0% by year-end 2025, and moves back up to about 4.7% most recently as tensions returned.

Those Treasury moves translated into changes in borrowing costs: 30-year mortgage rates climbed toward 7% early in 2025, eased to near 6.2% by March 2026, then rose again to roughly 6.7% amid renewed geopolitical strain. Dufrene notes energy-price and inflation shifts — including a reported CPI rise to 4.2% during the early-2026 conflict and a later monthly headline CPI drop of 0.4% — have altered Fed expectations and the odds of future rate action.

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