US Debt at $40T Sparks 'All-Hands' Yield Warning — SkimNews
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- Robin Brooks of the Brookings Institution called long-term yields an 'all-hands-on-deck situation,' noting that weaker economic data has failed to bring them down as it historically would, signaling hidden upward pressure
- U.S. national debt has reached $40 trillion, with the annual budget deficit heading toward $2 trillion and no signs lawmakers are working to rein it in
- Treasury Secretary Scott Bessent is working to double federal debt buybacks as part of the effort to keep long-term borrowing costs from spiking further
- Norges Bank Investment Management, the world's largest sovereign wealth fund at $2.3 trillion in assets, has proposed reshuffling its holdings away from Treasuries toward alternatives like mortgage-backed securities
- Foreign central banks have pulled back from their traditional role as anchor buyers of U.S. debt, with hedge funds — far more price-sensitive — stepping in as major players and stoking market volatility
- Yields in the UK, France, Germany, and Japan are also surging alongside U.S. Treasuries, as governments keep spending at COVID-era borrowing-cost assumptions even though interest rates have climbed to fight inflation
- Ed Yardeni pushed back on debt-crisis warnings, predicting the 10-year yield will hold between 4.00% and 5.00% in a range 'broadly consistent with a healthy economy'
Why it matters: With the deficit tracking toward $2 trillion annually and $40 trillion in outstanding debt now being absorbed increasingly by price-sensitive hedge funds rather than anchor foreign central banks, the Treasury must keep offering attractive yields — and the fact that yields are rising despite softening data suggests markets are pricing in fiscal risk, not economic strength, per the source.
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