US 10-Year Treasury Yield Hits 5.04%, Highest Since 2007; Bessent to Testify on Debt

The US 10-year Treasury yield rose to 5.04%, the highest since 2007. US Treasury Secretary Scott Bessent was scheduled to appear before the House Financial Services Committee at 10 p. m. Beijing time that day for a hearing covering fiscal policy, Treasury issuance and buyback plans, debt management, and the outlook for the dollar and interest rates. Bessent said in August that global growth is the way to solve the US debt problem; at an event in Texas last week, he reiterated that if federal spending remains restrained and economic growth reaches 3%, the US can grow its way out of debt.

Data show that US inflation-adjusted economic growth was close to 3% in both 2023 and 2024, but publicly held US debt climbed by about 10% and 7%, respectively, over the same period, annual deficits exceeded $1.6 trillion in each year, and debt as a share of economic output also rose. In the late 1990s, US gross domestic product sustained growth above 4%, and the fiscal position shifted from deficit to surplus, accompanied by tax increases and a post-Cold War slowdown in defense spending. US tax rates have since fallen sharply after multiple rounds of tax cuts, and lawmakers from both parties have in recent years generally voted to increase rather than cut federal spending; an aging population continues to push up spending on large benefit programs such as Social Security and Medicare; and US President Donald Trump wants Congress to approve $1.5 trillion in defense spending, an increase of 44%.

Surveys of US economists and the latest forecasts from the International Monetary Fund both show US economic growth slightly above 2% in 2027 and 2028. From Trump's return to the White House through May 2026, the number of US Social Security retirement beneficiaries increased by 2.8 million, while the number of workers contributing revenue for those benefits rose by only 593,000. Trump has said he will not change these benefit programs, and Congress has not pushed for major reforms to them. With one month left in the fiscal year, total net interest has reached $1.02 trillion, up 8.9% from the same period in 2025. US Treasury data show that as of the end of August, the average interest rate on outstanding Treasury debt was 3.48%, while the five-year benchmark rate, closest to the average maturity of currently outstanding Treasury debt, was about 4.77%.

The US Treasury has recently relied on lower-cost Treasury bills maturing in one year or less to issue debt, while the Federal Reserve is scheduled to announce its overnight policy rate decision on Wednesday. Trump has proposed sending a $5,000 check to every US adult if Republicans retain control of Congress in the November midterm elections. The proposal is estimated to cost $1.2 trillion for one year; the fiscal 2024 deficit was about $2 trillion; and without offsetting measures, the deficit would reach 9% or 10% of gross domestic product in 2027.

Since taking office, Bessent has set a goal of reducing the deficit-to-GDP ratio to about 3% before the end of Trump's term in January 2029. In 2023 and 2024, the ratio exceeded 6%, and in 2025 it was slightly below that level, partly because of a one-time change in the accounting treatment of federal student loans.