US Bond Market Demands Higher Yields on $40 Trillion Debt as Deficits Near 6% of GDP
Updated
Updated · Yahoo Finance · Aug 25
US Bond Market Demands Higher Yields on $40 Trillion Debt as Deficits Near 6% of GDP
3 articles · Updated · Yahoo Finance · Aug 25
Summary
$40 trillion in federal debt has not triggered a broad panic, but investors are demanding higher Treasury yields as they reassess how sustainable U.S. borrowing looks in a higher-rate world.
6% of GDP annual deficits are driving that reset more than the headline debt total, with borrowing still running at levels usually associated with recessions even as the economy keeps growing.
Economic growth has also fallen behind debt accumulation, a shift that began after the financial crisis and COVID-19 and was worsened by Trump's tax cuts, aging-related spending and tariff-refund costs.
Treasury Secretary Scott Bessent's new openness to capping long-term yields underscores how concerns have shifted from immediate default risk to the longer-term risk of a future fiscal cliff.