The U.S. Bond Crisis Highlights a Deeper Fiscal Rot

Treasury Secretary Scott Bessent announced a move to artificially cap rising yields on U.S. government debt, an intervention that had a positive market effect lasting less than a day. Yields on 10- and 30-year Treasury notes remain near 20-year highs, a sign investors want more compensation to hold U.S. debt as national debt topped $40 trillion this week and the fiscal-year deficit stands at $1.8 trillion and climbing.

Analysts quoted attribute the debt run-up largely to the Trump-era tax cuts, extended and expanded in the second term's tax package, plus pandemic-era stimulus under the Biden administration. Interest payments on the debt have reached roughly $1 trillion this fiscal year and are projected to double within a decade if trends continue, with an economist at the Peterson Institute dismissing Bessent's move as failing to address the deficit or monetary policy uncertainty.

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