U.S. government borrowing costs have risen to their highest levels in decades, with the benchmark 10-year Treasury yield now firmly above 5%. Net interest costs are estimated at about $1.05 trillion for the first 11 months of fiscal year 2026, with projections reaching $1.6 trillion by fiscal 2029. Federal debt held by the public is projected to stand at about 101% of GDP in fiscal 2026. However, several experts say a fiscal apocalypse is not imminent, as the average interest rate on U.S. debt at about 3.4% remains below nominal economic growth, which reached an annualized rate of 8.5% in the second quarter. The weighted-average maturity of U.S. government debt at about 5.9 years means higher borrowing costs feed through gradually rather than all at once.
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