Yields on long-term US Treasury bonds have reached their highest level in two decades: 5.19% on 27 August for 30-year bonds – a rise of 33 basis points since late June 2026 – and 4.67% for 10-year bonds. This rise in government bond yields indirectly increases the cost of borrowing for businesses and households, with a particularly pronounced effect on the sectors most sensitive to credit conditions, starting with the property sector.
In response to this situation, US Treasury Secretary Scott Bessent announced on 19 August that his administration intended to double the volume of its buybacks of long-term debt, from $2 billion to $4 billion, although this had no significant impact on market rates. Following this relative failure, the US Treasury suggested that it might draw on its Treasury General Account (TGA, approximately $950 billion) to finance government bond buybacks, which would give it significant room for manoeuvre on long-term yields, whilst ruling out the idea of turning to the Fed. Although the precise terms and the amount ultimately drawn down remain unclear, the scale of the funds available could be enough to reassure some investors. These government announcements mark a turning point: this is the first time in several decades that the US Treasury has sought to exert a direct influence on bond prices (apart from periods of very high volatility and obvious market dysfunction, such as in March 2020).
If these Treasury announcements fail to bring down long-term US bond yields, it is because they do not address the fundamental drivers of this rise. Among these the trajectory of US debt – which in mid-August exceeded the record level of $40,000 billion – weighed down by a widening deficit due to lower customs revenue, rising military expenditure and increased interest payments. If borrowing rates were to remain at their current levels in the coming years, US public debt could reach 131% of GDP by 2036.
Furthermore, demand for government debt is facing increasing competition from the private sector’s financing needs for AI development, as well as a possible withdrawal of Japanese investors. Added to this is a gradual shift in the investor base for Treasury bills, with institutional holders – who are traditionally insensitive to price fluctuations – gradually giving way to private investors who are more responsive to market conditions.
Finally, this rise in rates could also be linked to a possible erosion of the Fed’s credibility, given its new president’s close ties to D. Trump and his initial public statements, which have increased volatility, whilst inflation has been above its target for the past five years.
