US posts record $1.05 trillion net interest bill for fiscal 2026
The 10-year Treasury yield touched 5.125% in pre-market trading Friday, with the gap between 2-year and 10-year yields widening to 35.7 basis points
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Chart: US federal deficit, trailing twelve months
The US government paid a record $1.05 trillion in net interest on its debt in fiscal year 2026.
The figure lands as long-term borrowing costs stay elevated. The 10-year Treasury yield touched 5.125% in pre-market trading on Friday, and the spread between 2-year and 10-year yields widened to 35.7 basis points. That follows a sharp move a day earlier, when the 10-year yield fell 11 basis points to 5.08%, breaking a climb that had carried it from 5% in mid-September to 5.27% by month-end. The 30-year yield had reached multi-decade highs near 5.70% to 5.80% earlier in October.
Treasury has responded with tools such as debt buybacks, including repeated $6 billion operations, and foreign-currency intervention, rather than measures aimed directly at the underlying gap between spending and revenue. The record interest bill confirms the pressure that has pushed up long-dated yields since mid-September, even as those buyback operations have failed to slow the climb.
The record also raises the stakes around whether Thursday's pullback in the 10-year yield to 5.08% holds or reverses. A growing interest bill strengthens the case for continued heavy government bond issuance regardless of where yields settle in the coming weeks.