Rising Treasury yields worsen U.S. debt outlook, CBO scenario shows
The 10-year Treasury yield reached 5.23% and the 30-year hit 5.49%, the highest levels in about two decades. A Congressional Budget Office scenario with rates one percentage point above baseline projects publicly held debt at 222% of GDP by 2056. Annual interest costs are already $1 trillion, and the deficit is on track to hit $2 trillion this year.
The 10-year Treasury yield climbed to 5.23%, its highest since 2007, while the 30-year reached 5.49%, a level last seen in 2004. These rates have already exceeded the CBO’s February projections, which put the 10-year at 4.1% this year and gradually higher afterward.
In a CBO scenario where rates run one point above baseline, publicly held debt would reach 222% of GDP by 2056. The total deficit would rise to 14% of GDP, compared with 5.8% expected this fiscal year, and GDP growth would be 0.1 point lower.
Higher Treasury yields could ripple through mortgages, credit cards, and business loans, making borrowing costlier for households and firms. Taxpayers may face a growing interest burden, potentially limiting resources for public services or tax relief. Investors could see more volatility as government debt competes for capital. If debt continues rising, younger and future generations may bear longer-term economic costs.