Treasury Yields Above AAA Peers Push Up U.S. Borrowing Costs

U.S. Treasuries currently carry higher yields than the sovereign debt of most AAA-rated countries, a configuration noted in a June 24, 2026 research note by Richard Bernstein, Global Head of Macro & Customized Investing. The note states markets have priced U.S. debt as riskier than many AAA peers.

Bernstein points to market data that shifted after the U.S. lost its AAA rating in 2011. Ten-year Treasury yields have frequently traded above Germany’s 10-year bund in recent years. Credit default swap spreads on U.S. debt have been marginally higher than Germany’s since the downgrade.

Credit default swaps, which act as insurance against default, cost more to protect U.S. paper than some AAA peers. Higher CDS spreads mean buyers pay more to insure holdings against non-payment.

Many private-sector interest rates are set relative to government yields. Corporate loans, municipal bonds and consumer credit often add a risk premium to sovereign yields, so higher Treasury yields tend to lift borrowing costs for homeowners, businesses and local governments. The note includes comparisons showing U.S. mortgage rates exceed German mortgage rates in part because U.S. mortgage pricing tracks the 10-year Treasury.

The research distinguishes the U.S. Treasury’s market role from its formal credit standing. Because of its depth and liquidity, the Treasury market remains the global de facto ‘risk-free’ benchmark, the note says. At the same time, the U.S. no longer holds a de jure AAA rating, and the note’s analysis finds eight of nine AAA-rated countries borrow at lower yields than the United States.

On policy, the note outlines standard options to improve a nation’s balance sheet: raise revenues and cut spending. It reports political resistance to those options, with opposition to tax increases on one side and resistance to broad spending cuts on the other. The note also mentions inflation as an alternative path to reduce real debt burdens.

The note includes brief definitions and clarifications for readers: a basis point equals 0.01 percentage point; a credit default swap is a derivative used to hedge or trade credit risk. The author specifies the observations reflect current market pricing and are not presented as a forecast of sovereign default.