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President Donald Trump’s hand-picked nominee for Federal Reserve Chair, Kevin Warsh, took over from Jerome Powell on Friday, May 22 — and he’s landed in the hot seat. The Wall Street Journal calls the situation — replete with an ongoing war, tariffs and other inflationary pressures — “a dangerous brew.” (1)

Like Trump, Warsh wants to lower interest rates. Like Powell, his hands may be tied.

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The Fed cut the benchmark interest rate three times in 2025 (2). Powell held them steady (3) in 2026, unchanged in April at his last press conference. Normally, that would mean long-term borrowing costs for things like mortgages — based on Treasury bond yields — would hold steady, too. But since the outbreak of the Iran war, the 10-year Treasury yield has been nudging above 4.4%, affecting everything from mortgages to retirement portfolios and returns on everyday savings (1).

Understanding the current disconnect matters to almost everyone with money on the line.

When the government needs to borrow, which it does all the time, it sells Treasury bonds. Investors — including financial institutions like banks — buy those bonds and get a guaranteed return of interest payments over a set period of time.

The Fed controls the benchmark interest rate, but not the 10-year Treasury yield, which is set by millions of investors weighing inflation, fiscal sustainability and global capital flows.

They demand a certain rate of return in exchange for the risk of holding U.S. government debt. Right now they want higher compensation, what economists call a “term premium” (4). They are anxious about inflation and the U.S. government’s ability to maintain its current spending path without blowing up the debt.

Those concerns are valid. The Iran war has pushed oil prices well above $90 a barrel, which feeds into inflation and makes it harder for the Fed to keep rates low, according to Treasury‑market analysis from March (2) by the consulting firm RSM International.

Meanwhile, the U.S. government is spending over $970 billion a year in interest alone to service its debt, according to the Peter G. Peterson Foundation (5). As that debt matures and gets refinanced at today’s higher rates, that figure will only grow.

And that leads to what’s known as the doom loop. Higher Treasury bond yields result in higher interest on debt, which widens the deficit, forcing the government to issue more bonds to cover the shortfall. That pushes yields higher again and raises interest costs even more. A truly vicious cycle.

The Congressional Budget Office projects (6) that federal debt held by the public will climb from 101% of GDP to 120% of GDP by 2036, when interest payments will hit $3.1 trillion annually

When investors buy 10‑year Treasuries today, they’re essentially being asked to trust that this path is manageable, but the term premium shows how much, or how little, they believe it is.

Read More: Here’s the average income of Americans by age in 2026. Are you falling behind?

This increase in the bond market may affect average Americans in three ways:

Mortgage rates tend to follow the 10-year Treasury yield. And that’s exactly what’s happening now.

Anyone buying a home or refinancing right now is feeling the hit of rising Treasury yields directly in the pocketbook. The average interest rate on a 30-year fixed mortgage reached 6.65% (7), its highest level since August 2025.

Relief may not be coming anytime soon. Core inflation rose 3.3% year-over-year in April, well above the Federal Reserve’s 2% target. As a result, many economists surveyed by Reuters (8) expect the Fed to keep rates elevated for longer.

The good news? You may still be able to lower your housing costs. If your financial profile has improved since you first took out your mortgage, refinancing could help you secure a more favorable rate and lower your monthly housing costs.

And platforms like Mortgage Research Center help you view refinance rates offered by various lenders in your area within minutes.

Simply enter some basic information about your existing mortgage and finances and the Mortgage Research Center compiles and displays competitive rates offered by vetted lenders.

After matching with a lender, you can set up a free introductory call to learn how to transfer your current mortgage.

Credit card rates and auto loans are tied more to the Fed’s policy rate and broader credit conditions. If Warsh’s hands are tied by ongoing inflation — meaning he can’t lower interest rates — consumer debt levels could remain elevated.

That’s a challenge for millions carrying expensive debt. The average credit card APR stood at 25.21% as of May 25, according to Forbes (9). Meanwhile, American households collectively owe $1.25 trillion in credit card debt as of the first quarter of 2026, according to the Fed (10).

For borrowers juggling multiple high-interest balances, consolidating debt into a personal loan may provide some breathing room. Replacing several payments with a single loan at a lower interest rate can make repayment more manageable and potentially reduce interest costs over time.

Platforms like Credible let you compare rates offered on debt consolidation and personal loans from reputed lenders near you. In minutes, you’ll see all the lenders willing to help pay off your credit cards or other debts with a single personal loan.

You can find personal loans starting at 5.96% APR. Credible also offers a best rate guarantee — and if you close with a better rate than you prequalify for on the platform, you’ll get a $200 gift card.

For those stuck with higher auto loan interest rates, shopping around and refinancing your debt at a lower interest rate might help you free up extra cash each month. In fact, a survey conducted by LendingTree (11) found that those who shopped around for car loan rates and chose the lowest one saved an average of $2,346.

You can compare auto loan refinance rates offered by lenders near you for free through LendingTree.

Just answer a few simple questions about yourself and the vehicle you drive — and LendingTree will connect you with two to five lenders from their network of more than 300 lenders.

You may be eligible for refinance loans starting at 5.04% APR through LendingTree’s network.

There is one upside.

High-yield savings accounts, money market funds and short-term Treasuries are offering real returns in this environment.

Treasury Inflation-Protected Securities can help if inflation stays hotter than expected (12). Funds like the iShares 0-3 Month Treasury Bond ETF (13) (SGOV) which tracks short-term U.S. Treasury bonds are yielding above 4.3%.

For those seeking liquidity, high-yield savings accounts could also be a compelling place to park cash. This lets your cash quietly compound in the background while remaining readily accessible when you need it.

A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.

A Wealthfront Cash Account currently offers a base APY of 3.30% through program banks and new clients can get an extra 0.75% boost during their first three months on up to $150,000 for a total variable APY of 4.05%.

That’s ten times the national deposit savings rate, according to the FDIC’s March report.

Additionally, Wealthfront is offering new clients who enable direct deposit ($1,000/mo minimum) to their Cash Account and open and fund a new investment account an additional 0.25% APY increase with no expiration date or balance limit, meaning your APY could be as high as 4.30%.

With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8 million FDIC Insurance eligibility through program banks.

- With files from Godwin Oluponmile.

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We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

The Wall Street Journal (1); RSM International (2); U.S. Bank (3); Federal Reserve Bank of St. Louis (4); Peter G. Peterson Foundation (5); Congressional Budget Office (6); CNBC (7); Reuters (8); Forbes (9); Federal Reserve Bank of New York (10); LendingTree (11); TreasuryDirect (12); iShares (13)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.