> US sells 30-year bonds at highest borrowing costs since 2001

The US has paid the highest borrowing costs to sell 30-year bonds since 2001 as investors fret over the country’s mounting debt pile under Donald Trump’s administration as well as inflation that remains stubbornly high.

A $25bn Treasury auction of 30-year bonds on Thursday drew yields as high as 5.22 per cent, according to the US Treasury department. It marked the highest yield since the 5.52 per cent paid in August 2001, after which 30-year auctions were suspended for almost five years.

The yield in Thursday’s auction compares with 5.06 per cent at the previous 30-year sale in July, and 4.91 per cent just before Trump’s second term began in January 2025.

The rise in borrowing costs comes as the US debt pile has swollen to almost $40tn, pushing the debt-to-GDP ratio towards an all-time high. Meanwhile, Trump’s war with Iran has sent prices sharply higher, raising the bar for investors to scoop up bonds that will provide consistent interest rates for the next three decades.
The national debt — and the cost of borrowing — have roughly doubled over the past decade, fuelled by vast spending during the coronavirus pandemic. The government now spends more on servicing its debt than it does on national defence.

Trump returned to office vowing to bring America’s public finances under control, but nominal debt has since risen at its fastest rate outside of the Covid era, after the administration pushed through sweeping tax-cut legislation with the president’s so-called big, beautiful bill.

The higher borrowing costs have helped Treasury drum up robust demand, with Thursday’s auction drawing a bid-to-cover ratio — a measure of the amount of debt requested to how much was sold — of 2.39, down only slightly from last month’s figure of 2.44.

The Treasury department said earlier this month that it would keep auction sizes for longer-dated securities at current levels, which analysts expect to help keep yields on those bonds from rising even higher.

The move will mean that the Treasury will rely more on issuing short-term securities to service the ever-growing debt pile.

Debt held by the public outstripped GDP in the first quarter of 2026, according to government data analysed by the Committee for a Responsible Federal Budget.
According to the Congressional Budget Office, a non-partisan watchdog, the national debt is on track to surpass its post-second world war peak of 106 per cent by the end of the decade and hit 120 per cent by 2036.

Meanwhile, the Federal Reserve has struggled to convince investors of its ability to control a bout of high inflation as an energy price surge triggered by the war in Iran exacerbates the price pressures created by tariffs and booming spending on AI infrastructure.

Annual inflation jumped to a three-year high of 4.2 per cent in May as fuel prices surged at the height of the conflict. It has since receded, falling to 3.4 per cent in July, according to data released this week, but remains well above the Fed’s target.

While Fed chair Kevin Warsh has vowed to take decisive steps to crack down on inflation, the central bank has opted to hold rates steady at the two meetings since he took charge.

The yield on 30-year yields on the secondary market jumped to a 19-year


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