NEW YORK — The United States is now, by the Treasury’s own tally, sitting on a debt load of roughly $40 trillion, and the market’s new response to that figure is not a correction, not a panic, and not, by the account of at least one major bank, “a thing anyone is trying to do.” It is a yield curve.

Oil cleared $100 a barrel last week and has, in places, been trading above $109, and the ten-year Treasury, in turn, has climbed to its highest level in several years, just under 5 percent, while the thirty-year has pushed above 5.3. The two numbers, which do not, in any straightforward way, need to be related, are now related in the only way the bond market allows, which is that they are both, simultaneously, “the story.”

The mechanism, as the desks have described it to anyone who will sit down and listen, is now a loop with no off-switch. Higher oil feeds inflation. Inflation feeds the case for a rate hike. The rate-hike case feeds yields. Higher yields raise the cost of servicing a $40 trillion debt. The higher servicing cost, in the model, feeds the next round of inflation, which feeds the next round of oil, which is, at this point, a forecast rather than a price, but one that the traders have, out of caution, begun to treat as if it were.

"The yield curve is not a prediction. It's a receipt. The receipt just got longer."

Deutsche Bank, in a note that has been read by every person with a login, used the word that has now become the industry’s favorite: stagflation — the condition, which is to say the fear, of an economy that is not growing but is, at the same time, not getting cheaper. The bank described the fear as “rippling through multiple asset classes,” a phrase that, in bond-floor parlance, means “everything, and we are all just here now.”

The Treasury, for its part, has been characterizing the $40 trillion figure as “sustainable,” a word the agency has, in recent years, applied to a growing set of numbers, each of which the agency has described as “sustainable” at the precise moment it stopped being one, which is, by the account of a former official, “the definition of the word as the department currently uses it.”

“Nobody in this room is surprised by the number,” said a portfolio manager on the floor, who has, he noted, “stopped being surprised by the number,” and who described his personal relationship with the ten-year yield as “a long, on-again-off-again thing, but we’re on right now, and we’re both paying for it.”

THE LOOP, AS THE DESKS DRAW IT

  • Debt: roughly $40 trillion, per the Treasury.
  • Oil: above $100, at times near $109 a barrel.
  • Ten-year yield: just under 5%, a multi-year high.
  • Thirty-year yield: above 5.3%.
  • The word in the Deutsche Bank note: "stagflation."
  • The word in the Treasury statement: "sustainable."
  • What both words mean on the floor: "sit down."

At press time, the Fed’s September meeting was two weeks away, and the market had, in its usual way, begun pricing it before the Fed had begun discussing it, which the Fed has, in the past, described as “unhelpful,” and which the market has, in the past, described as “accurate,” and which, by the time the two descriptions are printed in the same column, will have become, as with the debt and the oil, a single number, a single loop, and a single line item that both sides are now, independently, calling “the story.”