The bond market's selloff is pushing 30-year Treasury yields higher despite a Treasury buyback push, and doubts are building over the dollar's safe-haven status. Trump administration officials say the debt and deficit picture is improving, but Congressional Budget Office figures show both still climbing, with the Federal Reserve's next moves now in focus.
President Donald Trump, Vice President J.D. Vance and Treasury Secretary Scott Bessent are pushing back publicly against the bond market's alarm over the national debt. But the numbers behind their claims tell a different story.
Officials play down the deficit
Bessent said there is a very good chance federal deficits have peaked, and claimed the U.S. economy could grow its way out of the debt problem. According to MarketWatch: "grow our way out". Trump argued that because the economy is strong, interest rates should go down, while Vance blamed a debt bomb the administration says it inherited from the Biden administration.
But the gross U.S. national debt stood at $35.2 trillion at the end of 2024 and has since risen to $40 trillion, an increase of nearly $5 trillion in a year and a half. The CBO had projected in January 2025 that debt would reach $39.2 trillion by the end of 2026, a mark the U.S. has already passed.
The 2025 federal deficit came in at $1.78 trillion, with this year's forecast at $1.85 trillion and next year's at $1.89 trillion — figures that keep rising rather than peaking. Over the next decade, the CBO expects GDP to grow by $14.8 trillion while the national debt grows by $24.3 trillion, nearly $10 trillion more than output.
Yields climb despite Treasury's buybacks
The bond market itself is signaling skepticism. 30-year Treasury bond yields stood at 5.27% on Friday, slightly higher than a week earlier, even after the Treasury Department announced Wednesday it would double its buybacks of long-dated bonds. That intervention briefly pushed the 30-year yield down 10 basis points before it climbed back 6 basis points the next day. For comparison, 30-year yields were at 4.85% at the end of 2025.
Dollar's safe-haven status in question
The rise in long-term yields has stoked worry over the dollar's status as a safe haven, since bond-market moves often precede shifts in Federal Reserve policy. Attention now turns to Fed Chair Kevin Warsh's speech at the Jackson Hole Economic Policy Symposium next Friday. Minutes from the Federal Open Market Committee's most recent meeting showed growing support for raising the target range for the federal-funds rate.
Sources: MarketWatch, MarketWatch
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