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AI Summary. US government bond yields have returned to near two-decade highs despite a buyback program targeting long-dated debt, indicating that investor concern over rising government borrowing remains unresolved.
Michael MacKenzie and Alice Gledhill BloombergCore argument: The 30-year Treasury yield surged 7 basis points to 5.27%, erasing virtually all gains from the Treasury’s surprise buyback announcement and signaling the intervention failed to calm investor concerns over fiscal sustainability.
US Treasuries erased almost all of the gains that followed the Trump administration’s surprise decision to increase buybacks of longer-dated bonds, signaling the move has done little to alleviate the angst about the surging government debt that has pushed some yields to the highest in close to two decades. The 30-year yield on Thursday rose over seven basis points to as much as 5.27%, where it was just ahead of the US Treasury Department’s announcement early Wednesday, before paring the gain. The 10-year yield touched 4.71%, just shy of its highest level since early 2025.AI Summary. U.S. federal debt is projected to reach 151% of GDP by 2036 and 309% by 2056 as rising real interest rates exceed economic growth, creating a self-reinforcing cycle of higher deficits and debt. National health spending is projected to reach 21.2% of GDP by 2036, rising to 37.2% by
Mark Warshawsky American Enterprise InstituteCore argument: U.S. federal debt-to-GDP reaches 151% by 2036 and 309% by 2056 under this general-equilibrium model—far exceeding CBO’s 120% and 175% projections—as real interest rates outpace economic growth, locking deficits and debt in a self-reinforcing spiral.
The Congressional Budget Office makes certain simplifying assumptions on health care spending, and is based on current law. By contrast, in the model presented in this paper, these variables are simultaneously determined by supply and demand, based on logical functional forms and parameter estimates from the literature or empirical analysis, and the model is based on current policy. This approach better reflects real economic relationships—between health care spending, the federal budget, and investment in capital—and changing underlying conditions, especially demographics. Within the next twenty or so years, the model predicts that federal government debt will grow significantly beyond historical experience, to be judged unsustainable because the real interest rate exceeds real economic growth. Debt-to-GDP will be 151% in 2036, 218% in 2046, and 309% in 2056, compared to CBO’s 120% in 2036 and 175% in 2056. Real interest rates rise for several decades, ratcheting interest payments, deficits, and debt in a vicious cycle.AI Summary. Emergency federal education grants during the pandemic did not measurably reduce student learning loss, partly because qualifying districts saw local revenues fall by ~$907 per pupil over three years — offsetting federal funds rather than supplementing them.
Jeffrey Clemens, Philip Hoxie and Stan Veuger National Bureau of Economic ResearchAI Summary. A 0.5% annual productivity growth boost would reduce publicly held federal debt by 39% of GDP over 30 years, cutting roughly half of the projected rise from 101% to 175% of GDP, through higher tax revenue, slower spending growth relative to GDP, and debt dilution that outweighs higher borrowing costs.
Karen Dynan, Douglas Elmendorf and Louise Sheiner National Bureau of Economic ResearchAI Summary. Public debt has risen sharply across both advanced and emerging economies, with cyclically adjusted primary deficits nearly doubling in advanced economies to 1.9% of GDP and surging from 0.1% to 1.8% in emerging markets, leaving governments with limited capacity to absorb future economic shocks.
BIS Staff Bank of International SettlementsCore argument: Cyclically adjusted primary deficits in AEs doubled to 1.9% of GDP since 2022 versus 1.1% over 2000–2019, reducing fiscal space.
Many countries entered the current energy crisis with limited fiscal space. Public debt in [Advanced Economies] (AE) has risen steadily over recent years (Graph 15.A), reducing governments’ ability to cushion fallout from higher energy prices. Although the increase partly reflects successive shocks, from the Covid-19 recession to the war in Ukraine, persistent failures to make meaningful progress on fiscal consolidation during economic expansions have also played a part. Cyclically adjusted primary deficits in AEs averaged 1.9% of GDP from 2022 onwards (Graph 15.B), nearly double the 1.1% recorded over the two preceding decades. [Emerging market economies] (EME) have seen an even sharper deterioration (1.8% since 2022 versus 0.1% between 2000 and 2019). Fiscal positions are set to remain strained over the coming years. Debt servicing costs are unlikely to ease soon, as higher interest rate payments continue to weigh on fiscal accounts (Graph 15.C). Deficits in 2027 are projected at or above 2025 levels in most jurisdictions.AI Summary. T-bill issuance has reached ~85% of gross Treasury supply, near a two-decade high, making government borrowing costs increasingly sensitive to short-term interest rates set by the Federal Reserve.
Torsten Sløk ApolloCore argument: T-bills comprise 85% of gross Treasury issuance, near 20-year highs, tying federal borrowing costs directly to Fed policy rates.
T-bills now account for almost 85% of gross Treasury issuance, near the highest share in over two decades. By tilting issuance toward short-dated debt, the government ties its borrowing costs more closely to the front end of the curve, making its financing increasingly dependent on Fed policy.