- The 10-year Treasury yield has climbed 123 basis points since the end of February, closing at 5.19% on Wednesday, and the average 30-year fixed mortgage rate hovers around 7.5%.
- The FY26 deficit is set to come in near $2 trillion, which would be roughly 6.0-6.2% of GDP based on CBO's $1.993 trillion estimate.
- Treasury Secretary Scott Bessent's target of a deficit below 4% of GDP by the end of Trump's term is out of reach, according to the analysis.
- Corporate debt issuance for AI infrastructure is competing with Treasuries for investor capital, adding upward pressure on long-term yields.
- Divided government after the Nov. 3 midterms makes meaningful deficit reduction unlikely for years.
Quotes
“My view is that we've got this mountain of debt, and we have to grow our way out of it”
“It would take a decade of 7.2% growth to balance the budget with growth alone”