US 10-Year Treasury Yield Hits 25-Year High as Deficit Fears Outweigh 3% Growth Bets
Updated
Updated · The Guardian · Oct 11
US 10-Year Treasury Yield Hits 25-Year High as Deficit Fears Outweigh 3% Growth Bets
3 articles · Updated · The Guardian · Oct 11
Summary
The 10-year Treasury yield climbed to its highest level in almost a quarter century, more than 1 percentage point above where it stood when Trump launched the Iran war.
Investors are demanding higher returns because war-driven inflation has already pushed the Fed to raise short-term rates, while widening US deficits deepen concerns over future borrowing needs.
Federal interest costs now consume 3.3% of GDP, up from a 50-year average of 2.1%, and the deficit has already reached 6% of GDP; the CBO sees it nearing 7% by 2033.
Trump’s One Big Beautiful Bill Act is estimated to add $4.7 trillion to debt through 2035, while a promised $5,000 adult dividend would further strain the fiscal outlook.
Claims that AI-led growth can close the gap face steep math: the CFRB says cutting the deficit to 3% of GDP by 2036 would require 4.4% annual growth, while balancing the budget would need 7.2%.