US national debt passes $40tn after doubling in a decade
US national debt reaches $40.05tn, doubling in 10 years as 30-year bond yields hit a near 20-year high amid rising inflation concerns.
Stock photo for illustration only, not from the actual event
- US national debt has surpassed $40.05tn, doubling from around $20tn recorded in 2016.
- The yield on 30-year US Treasury bonds hit 5.34%, reaching its highest level in nearly 20 years.
- The Congressional Budget Office projects total debt could climb to approximately $64tn by 2036.
- The US Treasury announced a plan to double its bond buyback operations to $4,000m to support liquidity.
Official figures from the US Treasury reveal that the nation's public debt has officially crossed the milestone of $40.05tn (approximately £29.4tn). This staggering accumulation covers all outstanding Treasury bonds, bills, and notes issued by the federal government, reflecting a decade of heavy borrowing and spending under the administrations of both Donald Trump and Joe Biden.
This upward trajectory in government borrowing has outpaced earlier projections from independent fiscal watchdogs. The Congressional Budget Office (CBO) had previously estimated that overall borrowing would reach $39.6tn only by the end of fiscal year 2026. Furthermore, the CBO projects that national debt will continue to climb sharply, reaching about $64tn by 2036, pushing dangerously close to the statutory debt ceiling of $41.1tn.
Concerns surrounding the escalating debt have intensified as the interest rate on 30-year Treasury bonds climbed to 5.34% on Tuesday, marking the highest level seen in nearly 20 years. These yields directly influence borrowing costs across the economy, impacting everything from federal government financing to consumer mortgages, car loans, and credit card interest rates.
Stock photo for illustration only, not from the actual event
The recent surge in bond yields has been primarily driven by rising oil prices linked to ongoing geopolitical tensions involving the US and Iran, alongside investor anxieties over persistent inflation. Additionally, markets remain wary of the massive amounts of capital being funneled by tech firms into artificial intelligence development, where timelines and returns on investment remain highly uncertain.
"The US government feared the pain of 5% or higher yields over the long term not just because it raised borrowing costs for the government, but also the private sector."
Rene Albrecht, Senior Analyst at DZ Bank, Germany
The rapid expansion of sovereign debt and soaring bond yields highlight broader structural pressures within the global financial architecture. As the world's largest economy faces elevated borrowing expenses, central banks worldwide are forced to navigate tighter monetary conditions. Simultaneously, aggressive capital expenditure by the technology sector into AI infrastructure underscores a wider trend of high-stakes financial risk-taking that could influence macroeconomic stability for years to come.
In response to mounting market stress, the Treasury Department announced an intervention aimed at providing greater liquidity support for long-term debt instruments. The government will increase its buyback operations from $2bn to $4bn, effective from September 9 to November 4. Following this announcement, the 30-year borrowing rate eased slightly to 5.18%. However, market analysts caution that given the sheer scale of outstanding Treasury debt, such measures are unlikely to provide meaningful long-term relief.
Source: BBC Business
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