Treasury yields surge, raising U.S. debt service costs to near‑crisis

The United States is confronting a fiscal squeeze as 30‑year Treasury yields climbed to 5.2%, the highest in 19 years, and 10‑year yields reached 4.7%, a peak not seen since 2007【1】. At current borrowing costs, interest payments on the $39 trillion national debt could swell dramatically, eroding revenue that funds programs such as Defense, Social Security and Medicare.

Key takeaways

• 30‑year Treasury yields hit 5.2% and 10‑year yields 4.7% in late May 2026, levels unseen in nearly two decades【1】.
• The Committee for a Responsible Federal Budget projects interest expenses could rise from 14% to 30% of federal revenue by 2036 if yields stay near recent peaks【1】.
• Net interest payments are already projected to exceed $1 trillion in FY 2026, up from $345 billion in 2020【2】.
• The federal government will need to borrow roughly $10 trillion in the next 12 months to refinance maturing debt and cover deficits【1】.
• Debt held by the public has surpassed $31 trillion, while total gross debt topped $39 trillion, underscoring the scale of the borrowing challenge【2】.

Rising yields and the debt‑service dilemma

The surge in long‑term Treasury yields follows a period of ultra‑low rates that began during the COVID‑19 pandemic, when one‑year Treasury bills yielded about 0.2% in early 2022【1】. Today, those short‑term instruments cost roughly 3.7%, an 18‑fold increase. The higher yields matter because the government must refinance existing bonds and issue new debt to fund ongoing deficits. Roughly $7.5 trillion of the $10 trillion borrowing needed in the coming year will go toward repaying maturing Treasury securities, while the remaining $2 trillion will bridge the gap between revenues and spending【1】.

A report by the non‑partisan Committee for a Responsible Federal Budget warns that if yields remain at current levels, interest outlays could climb to $2.5 trillion by 2036—about 2.5 times today’s amount—and become the second‑largest budget category, overtaking Medicare【1】. The same analysis notes that interest costs per household could rise from $7,900 last year to $17,000 a decade from now, highlighting the direct impact on American families【1】.

Fiscal context and future risks

The national debt crossed $39 trillion in May 2026, a milestone reached just five months after passing $38 trillion【2】. The Congressional Budget Office projects the federal deficit will grow from $1.9 trillion in FY 2026 to $3.1 trillion by 2036, with debt held by the public rising from 101% of GDP today to 120% by that year【2】. Over the next 30 years, the CBO’s baseline forecasts debt reaching 175% of GDP, a ratio surpassing the post‑World War II peak【2】.

Economists emphasize that the sheer size of the gross debt figure is less informative than the debt held by the public, which now exceeds $31 trillion and represents borrowing from external investors rather than intra‑government accounts【2】. Nonetheless, both metrics signal a trajectory that budget analysts deem “unsustainable” and a potential catalyst for a fiscal crisis if borrowing costs continue to climb【2】.