The United States has crossed a fiscal milestone that carries global consequences: its national debt has officially surpassed $40 trillion (€34.4 trillion), according to Treasury data released on Wednesday. The same day, the US Treasury announced it would double the size of its bond buyback operations in an effort to soothe a market that has grown increasingly nervous about Washington's borrowing spree.
The twin announcements are two sides of the same coin. On one hand, the government is borrowing at a record pace to fund spending on Social Security, Medicare, defence, and interest payments. On the other, investors holding the longest-dated US government bonds are demanding higher returns, pushing yields to levels not seen in nearly two decades. The 30-year Treasury yield hit its highest point since 2007 on Tuesday, a sign of what analysts have called a 'buyers' strike' that began in late June.
The Treasury's response is a targeted repurchase programme. Rather than printing new money, it uses cash already on hand to buy back older, less liquid bonds from investors. This improves market functioning without changing the total stock of debt. Starting 9 September, the maximum size of each buyback operation in the 10-to-20-year and 20-to-30-year segments will at least double, from $2 billion (€1.7 billion) to $4 billion (€3.4 billion), running through the next quarterly refunding on 4 November.
The Treasury said the change reflects 'strong sponsorship from market participants' in that part of the yield curve, but the timing was no accident. The announcement came just hours before the debt figure was confirmed, and it followed a day of intense pressure in the bond market. Yields fell after the news, with the 30-year dropping roughly 9 basis points and the 10-year around 6, while Wall Street rallied. President Donald Trump, asked whether Americans should worry about the volatility, replied simply: 'No, I don't think so.'
A modest fix for a massive market
Not everyone is convinced the move goes far enough. The increase in buyback size is modest compared with the $32 trillion (€27.5 trillion) Treasury market it is meant to steady. Mohamed El-Erian, the prominent economist, suggested that the outsized market reaction reflected hopes of broader intervention to come, rather than the direct effect of the buybacks themselves. Thomas Simons, chief US economist at Jefferies, said the announcement broke with the Treasury's usual pattern of steady, well-flagged communication about its borrowing plans and felt 'shot from the hip'.
The debt figure, confirmed by Treasury data covering Tuesday, splits into $32.27 trillion (€27.75 trillion) held by the public and $7.78 trillion (€6.69 trillion) owed between government accounts. It arrived roughly two fiscal years earlier than expected: the Congressional Budget Office projected in May 2023 that the threshold would not be crossed until 2028. The pace has been remarkable even by recent standards—$39 trillion (€33.5 trillion) was reached only in March, and $38 trillion (€32.6 trillion) the previous October.
The US government borrowed $1.8 trillion (€1.5 trillion) in the first ten months of this fiscal year alone, already more than it borrowed in the whole of the last one. 'The national debt is not just a number on the government's balance sheet,' said David Young, president of the Conference Board's CEO Center, noting it shapes the financial decisions Americans make daily.
The two stories feed each other. A bigger debt load makes investors warier about lending long-term, which pushes yields higher. In turn, higher yields raise the government's own interest bill, adding further to the debt the Treasury has to finance next. This dynamic is not confined to the United States; it ripples through global markets, affecting borrowing costs for governments and companies worldwide, including in Europe.
For European investors and policymakers, the US debt trajectory is a reminder of the interconnectedness of global finance. As global markets waver ahead of US inflation data, the stability of the world's largest bond market remains a cornerstone of the international financial system. The Treasury's buyback programme may provide temporary relief, but the underlying fiscal trajectory remains a concern that extends far beyond Washington.
