Others have spoken to why US treasuries were considered a risk free asset, what is important now is that the US Treasury's market participation has been to attempt to keep borrowing costs lower without paying down the debt (US-Japan currency bailout, treasury bond buyback). The bond market is rejecting the theatrics. Fiscal policy can change (spend less, stop issuing new debt, start paying down existing debt), or yields will continue to rise, causing a potential debt spiral (as the US will be forced to issue new debt and refinance existing debt at ever increasing interest rates). Imagine your credit card interest rate keeps increasing, while you carry a balance the size of your annual income, you keep charging on the card, and the limit is unknown.

This will flow into consumer debt markets, pushing up borrowing costs for everyone (auto loans, credit cards, mortgages, etc), as all consumer debt is priced off of "risk free" US treasury yields. This could slow the US economy further, and the economy is already at stall speed without AI investment.

US debt tops $40T as Treasury doubles bond buybacks to calm markets