Interest rates are surging higher, threatening to derail the United States' tenuous economic recovery.

Treasury yields and mortgage rates reached four-month highs yesterday, and the spread between two- and 10-year Treasuries spiked to an all-time peak of 275 basis points.

Bond sellers have been emboldened by the lack of Treasury purchases by the Federal Reserve.

"The market has built an expectation that the Fed will step in and buy more Treasuries and expand its program to support the markets," Christian Cooper, interest rate strategist at RBC Capital Markets, tells The Wall Street Journal.

"With that failing to materialize, investors are exiting."

The slump in Treasuries has spilled over to mortgages, as traders sell mortgage securities to hedge against that slump. The 30-year fixed mortgage rate is now 5.08 percent.

"The bear market that has been in Treasuries has finally had an impact on something, and that's a big deal," Cooper's colleague David Ader told CNBC. "It means mortgage rates are going up, and that brings into question and challenges the housing market recovery ... and the economy."

The bond market woes illustrate the difficulty of engineering a sustainable economic recovery.

"The market is looking at the over $1 trillion deficit and how we'll finance it and concluding it is too big to finance without Fed assistance," economist James Bianco tells the Journal.

"But the Fed assistance is causing inflation worries. We're caught in a vicious cycle."