Trump Spending Has Created The Largest Deficit Since Covid – OpEd |
The author says the 10-year Treasury yield topped 4.9% (highest since 2007) and the 30-year topped 5.3% (highest since 2002) mainly because investors expect bigger deficits and lasting inflation, so they demand more yield.
Cited Treasury tally: FY2026 deficit after 10 months ~$1.79 trillion (largest in five years in CPI terms, short of COVID peaks); July outlays $766 billion, second only to July 2020. National debt ~$40.1 trillion. July interest ~$117 billion; FY interest so far >$1.1 trillion, heading toward >$1.3 trillion vs. Defense under $950 billion.
Debt-to-GDP is put above 120%. About $9–9.7 trillion must be refinanced, much of it short-term. The piece argues the Iran war and current spending mean no real belt-tightening, so more supply of Treasurys and higher yields. Commentary on markets and fiscal reports, not investment advice.
Bond yields are ripping, with the 10-year climbing above 4.9% and at the highest level since 2007. Meanwhile, the 30-year yield has risen above 5.3 percent, the highest level seen since 2002.
There are many reasons that Treasury yields might increase, but given the current fiscal situation in the United States, the most likely dominant factor behind the current upward surge in the demand for higher yields is this: investors expect that federal deficits will further rise and will flood the market with trillions in new Treasurys in coming years. Moreover, price-inflation metrics show that inflation isn’t going away. This will push down demand on long-term bonds.
To illustrate where we are fiscally right now, let’s look at the Treasury Department’s most recent monthly report.
The current fiscal year began in October, so we are now ten months in. The cumulative deficit, so far, for........