Why surging Treasury yields don’t signal a U.S. 'fiscal apocalypse' — yet

A trader works at the New York Stock Exchange on Sept. 2, 2026. NYSEU.S. government borrowing costs have risen to their highest levels in decades, stoking concerns that the country's growing debt burden could eventually trigger a fiscal crisis. Will it?The benchmark 10-year Treasury yield is now firmly above 5%, while the government's net interest costs estimated at about $1.05 trillion in the first 11 months of fiscal year 2026.Experts are voicing concerns over the vicious cycle of rising debt and higher yields. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a U.S. policy think tank, has warned that higher borrowing costs risk becoming self-reinforcing as mounting interest expenses force the government to borrow still more."The real threat is the debt spiral. If interest begets debt, and debt begets interest, eventually debt will spin out of control. A fiscal crisis, once unthinkable, is now a distinct possibility," MacGuineas said in a statement last month after the 10-year Treasury yield crossed 5%.The nightmare scenario is relatively straightforward: investors demand higher yields to lend to a heavily indebted government; those higher rates push u...