Trump Spending Pushes the Deficit to Its Highest Level Since COVID

Long-term Treasury yields are surging to levels not seen in decades, with the 10-year climbing above 4.9 percent and the 30-year above 5.3 percent, as investors brace for a flood of new government debt. Fiscal year 2026’s cumulative deficit has already reached $1.79 trillion, the largest outside the Covid era, while the national debt closes in on $40.1 trillion and annual interest payments alone are set to exceed $1.3 trillion.

The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

Bond yields are ripping today, 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.