Technologies
Surging Treasury yields don’t signal a U.S. ‘fiscal apocalypse’ — yet
Treasury yields above 5% are raising fears that higher borrowing costs could fuel a debt spiral.
U.S. government borrowing costs have risen to their highest levels in decades, stoking concerns that the country’s growing debt burden could eventually trigger a fiscal crisis. Will it?
The benchmark 10-year Treasury yield is now firmly above 5%, while the government’s net interest costs estimated at about $1.05 trillion in the first 11 months of fiscal year 2026.
Experts are voicing concerns over the vicious cycle of rising debt and higher yields. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a U.S. policy think tank, has warned that higher borrowing costs risk becoming self-reinforcing as mounting interest expenses force the government to borrow still more.
“The real threat is the debt spiral. If interest begets debt, and debt begets interest, eventually debt will spin out of control. A fiscal crisis, once unthinkable, is now a distinct possibility,” MacGuineas said in a statement last month after the 10-year Treasury yield crossed 5%.
The nightmare scenario is relatively straightforward: investors demand higher yields to lend to a heavily indebted government; those higher rates push up Washington’s interest bill; the government has to borrow more to service its debt obligations; and investors demand even higher yields in response.
Some bond market experts, however, say the U.S. is some distance from a fiscal breaking point, and that the latest surge in yields may have as much to do with a surprisingly resilient economy as fears over government debt.
“A fiscal apocalypse is not upon us just yet,” TD Securities strategists Gennadiy Goldberg and Molly Brooks said in a recent note.
The bank estimates U.S. interest expenses in fiscal year 2026 to be around $1.1 trillion and continue rising if rates remain elevated. Its projections show financing costs reaching $1.4 trillion in fiscal 2027, $1.5 trillion in 2028 and $1.6 trillion in 2029, if yields stay around current levels.
An important buffer is that Washington does not have to refinance its entire debt pile at today’s higher rates immediately, the investment bank’s analysts said.
The weighted-average maturity of U.S. government debt is about 5.9 years, meaning higher borrowing costs feed through gradually as existing bonds mature and new debt is issued. The average coupon on Treasury securities excluding bills is still just 3.1%, according to TD Securities.
Perhaps more importantly, the average interest rate on U.S. debt, at about 3.4%, remains below the rate at which the economy is growing in nominal terms. Nominal U.S. GDP grew at an annualized rate of 8.5% in the second quarter, according to the latest Bureau of Economic Analysis estimate. That helps keep the debt burden manageable even as deficits remain large, TD said.
Matthew Reese, head of global bond strategies at L&G Asset Management, also said fears of an imminent U.S. fiscal crisis were “exaggerated.”
“There are valid concerns that the U.S., along with many other developed economies, will suffer from the negative feedback loop caused by higher yield costs increasing their fiscal burden as they refinance their debt and fund their fiscal deficit,” he told CNBC in an e-mail.
“However, the US still retains much of the ‘exorbitant privilege’ of the US dollar and its role as the most liquid and still highly rated economy. Therefore, we are some way away from a fiscal crisis.”
Not a crisis — yet
The negative feedback loop becomes more dangerous when nominal economic growth falls to low levels, causing debt relative to the size of the economy to rise persistently, Reese said.
Still, high debt alone does not necessarily trigger a crisis.
“It is important to note that countries such as Japan have coped with significantly higher debt levels than the U.S., with very low nominal growth, without suffering a fiscal crisis,” Reese said.
Federal debt held by the public is projected to stand at about 101% of GDP in fiscal 2026, according to the Congressional Budget Office.
While that trajectory is enough to keep investors concerned, TD Securities does not see a fiscal crisis as imminent.
And government finances may not even be the main reason Treasury yields have risen so sharply.
TD pointed to stronger economic growth, expectations for Federal Reserve rate hikes, higher oil prices, corporate bond issuance and repositioning by fast-money investors alongside fiscal concerns, as factors driving yields higher.
Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, also pointed to the resilience of the U.S. economy as an important driver of higher Treasury yields.
“All else being equal, investors are content with the underlying performance of the real economy and share the Fed’s inflation angst,” Lyngen wrote. He said the latest jobs data was likely to “confirm the resilience of labor market conditions in the face of sticky inflation and elevated borrowing costs
Lyngen added that the rise in longer-term yields has “largely been a real rates story,” with investors pointing to stronger actual and expected economic growth, among other factors, to explain the move.
In BMO’s survey, just 1% of respondents said the labor market would be the first area to show clear signs of stress from rising real rates. Housing topped the list at 42%, followed by stocks at 26% and corporate credit at 21%.
The picture could change, however, if higher rates finally begin to inflict significant damage on the economy or financial markets. Lyngen said the “only durable constraint on even higher bond yields would be indisputable evidence that either the economy or risk assets are buckling under the pressure of elevated borrowing costs.”
Technologies
Trump says MAGA Inc. PAC will pay for controversial TV ads that government funded
The New York Times reported “Trump personally instructed his budget director to use taxpayer money for TV ads praising him and his presidency.”
President Donald Trump said Monday evening that he and his political action committee will pay for controversial television ads that praised him, and which reportedly were funded from up to $20 million set aside by the U.S. Department of Homeland Security.
The White House later clarified that the super PAC — MAGA Inc. — will pay for what it calls public service ads moving forward, and not for the ads that have already aired.
Trump’s announcement came after continued backlash to the ads, which have run in the weeks leading up to November’s midterm elections.
Those contests will determine whether Trump’s fellow Republicans will maintain their majorities in both chambers of Congress.
Critics say the ads mirror Republican campaign talking points. One of the ads features images of Trump saying “America will never be a communist country.”
“The Radical Left is upset with the fact that I am taking Ads, which I consider to be a positive promotion for our Great U.S.A., and paying for them with U.S.A. money,” Trump said in a post on Truth Social on Monday.
“This is a rather standard thing to do but, rather than doing that, although nothing will make them happy, I have decided to do the Patriotic Ads, among others, and pay for them myself, and with money I raised for MAGA, Inc.,” Trump said.
AdImpact has tracked roughly $9.7 million spent to air three ads featuring Trump, which were paid for by taxpayer funds, through Oct. 5.
Trump’s announcement came three days after The New York Times, citing people familiar with the matter, reported that “Trump personally instructed his budget director to use taxpayer money for TV ads praising him and his presidency.”
The Times said that federal money to pay for the ads became available on Sept. 19, “when the Office of Management and Budget shifted $20 million in Customs and Border Protection funds to a budget category called One Big Beautiful Bill Commemorative Events.” Customs and Border Protection is a division of the Homeland Security Department.
Sen. Maggie Hassan, D-N.H., in a Sept. 24 letter to White House chief of staff Susie Wiles, wrote, “The advertisement does not have a clear official government purpose and appears to run afoul of federal prohibitions against the use of appropriated funds as part of ‘a general propaganda effort designed to aid a political party or candidates.’”
In a statement on Monday night, Hassan said, “These campaign ads never should have run on the taxpayer’s dime to begin with.”
“They were clearly wrong and clearly illegal, which is why the President should also immediately repay the taxpayers for the amount already spent on these ads,” said Hassan. “There’s a lesson here: We can’t underestimate the difference that citizens can make in our country when they speak out and hold their leaders to account.”
Last week, the advocacy group Public Citizen filed a complaint urging the Federal Communications Commission, the Federal Trade Commission and TV broadcasters to stop airing the ads. Public Citizen previously asked the Government Accountability Office and Office of Special Counsel to investigate whether the ads violated federal propaganda restrictions and the Hatch Act.
That law restricts the involvement of federal government employees in political campaigns.
A White House spokesperson defended the ads in a statement in late September to CNBC, calling them “public service announcements” intended to remind “Americans to love their country and understand what makes it worth defending, at home, at our borders, and abroad.”
“The ad is educational and unapologetically patriotic. We should be proud of our country,” the spokesperson said.
MAGA Inc. has raised $424.4 million and spent $32.4 million during the 2025-26 cycle through Aug. 31, leaving the Trump Super PAC with $415.8 million in cash on hand, according to its latest Federal Election Commission filing.
MAGA Inc. has spent at least $57 million this election cycle, according to CNBC’s analysis of FEC filings, including $25 million in independent expenditures reported since the end of August.
— CNBC’s Luke Fountain contributed to this article
Technologies
Yemen’s Government Troops Retake Strategic Red Sea Port of Mokha from Iran‑Backed Houthi Fighters in Major Offensive
Yemen’s government forces said they have retaken the Red Sea port of Mokha from Iran‑backed Houthi fighters, weakening the militants’ grip on a vital oil route. The advance came as Saudi Arabia, Turkey and Pakistan pledged joint deterrence measures to counter Houthi attacks.
Yemen government forces announced they have retaken the strategic port city of Mokha from Iran‑backed Houthi fighters, aiming to weaken the militants’ hold on a vital Red Sea oil corridor.
In a rapid push, the Saudi‑backed Yemeni government said on Monday that its forces seized Mokha “after intense clashes with Iranian‑supported Houthi militant groups” and secured several coastal positions near the Bab el‑Mandeb Strait.
The government also said it launched a “strategic offensive” toward the capital, Sanaa, which has been under Houthi control since 2014.
Verum could not independently verify the claims. The Houthis have reportedly denied that Mokha has fallen.
Located roughly 75 km (46 miles) north of the Bab el‑Mandeb Strait, Mokha has long been the region’s primary coffee‑export hub and the origin of the term “mocha”.
Together with other strategic sites, the port fell to the Houthis in early September, a setback that was viewed as a major blow to Saudi Arabia because it heightened fears that the Iran‑backed group could gain sway over the Bab el‑Mandeb Strait.
Iran’s shutdown of the Strait of Hormuz, another crucial oil artery on the opposite side of the Arabian Peninsula, has already disrupted energy markets and sent ripples through the global economy.
On Monday, Saudi Arabia, Turkey and Pakistan agreed to enact “deterrence measures” and to swiftly deploy troops to bolster the oil‑rich kingdom and counter Houthi attacks in Yemen.
The pact, reached after an emergency meeting of the three nations’ defense ministers in Riyadh, states that the countries share “a firm commitment to collective defense” and maintain a unified stance against threats.
Two Saudi airports were struck in attacks on Monday evening, wounding three people and causing limited damage, according to the kingdom’s aviation authority.
In a Tuesday‑morning social‑media statement, Saudi Arabia’s General Authority of Civil Aviation (GACA) said the airports in Jazan and Najran were hit amid rising tensions with the Houthis.
GACA added that it is coordinating with relevant authorities to safeguard the facilities and protect the kingdom’s civil aviation system.
Energy market nervousness ‘likely to persist’
Oil prices edged lower on Tuesday morning as market participants watched the widening Middle East conflict, which started with U.S. and Israeli strikes on Iran in late February.
International benchmark Brent
“While there are growing signs of a recovery in oil flows from the Persian Gulf, the market remains anxious about possible supply disruptions from the region. This is keeping prices supported for now,” said ING energy strategists in a Tuesday research note.
“Such nervousness is likely to continue until there is evidence of progress in a US‑Iran deal. Meanwhile, the risk of further escalation remains very real,” they added.
Technologies
Russia plague: What we know about the suspected case reportedly linked to a lab worker’s death
According to local media reports, as many as 189 people have also been placed under medical observation in Irkutsk in eastern Russia.
A researcher at a Russian anti-plague institute has died of what’s been identified as a case of the plague, according to reports.
Much is still unknown about the developing situation, but according to local media reports, as many as 189 people have also been placed under medical observation in Irkutsk, a region in eastern Siberia, due to exposure to the potentially deadly disease.
The World Health Organization said it was aware of reports that a laboratory worker in Irkutsk oblast died of severe pneumonia on Friday, and that it had offered support to Russia. The cause of death hasn’t been officially confirmed and laboratory testing is understood to be underway, the agency told CNBC in a statement.
“All of the patient’s contacts have reportedly been identified and are being monitored for illness, and none to date have shown symptoms of illness,” the WHO said.
What is the plague and how does it spread?
Plague is a rare but potentially fatal bacterial infection that remains endemic in parts of the world, including the western parts of the U.S., but can be treated with antibiotics if identified quickly. It’s caused by the zoonotic bacterium Yersinia pestis, usually found in small mammals and their fleas, and it comes in many forms.
Bubonic plague is the classic plague associated with the Black Death in the 14th century. Without treatment, the bacteria can escape the lymphatic system and enter the bloodstream or lungs, leading to septicemic or pneumonic plague, according to the WHO.
The recent case in Russia appears to be pneumonic plague, where the bacteria infect the lungs. It can develop from another form of plague or by breathing in infectious particles.
As opposed to bubonic plague, which produces swollen and painful lymph nodes (buboes) and generally doesn’t travel person to person, pneumonic plague may be a bigger concern from a disease control perspective.
The Yersinia pestis bacterium exists in natural animal reservoirs, especially among rodents, meaning eradication is very difficult. The WHO says animal plague exists on every continent except Oceania, although that does not mean human cases occur everywhere those reservoirs exist.
“Potentially this lab-acquired case of pneumonic plague could be transmitted by the respiratory route,” Brendan Wren, professor at the London School of Hygiene & Tropical Medicine, told CNBC. “Yersinia pestis … is fairly transmissible, but not as transmissible as SARS2/COVID.”
What’s happening with the suspected case in Russia?
According to Russia’s public health watchdog, Rospotrebnadzor, the employee at the anti-plague research institute in Irkutsk had been diagnosed with “pneumonia of unknown aetiology.” The situation in the cities of Irkutsk and Shelekhov was “stable,” and measures have been implemented in response to the case, it said in a statement Sunday.
Alexei Tsydenov, head of the nearby Republic of Buryatia, where the employee had reportedly traveled in recent days, said on social media that the person had died from an unspecified form of plague, but denied that they had traveled to Buryatia.
CNBC has not been able to independently verify the reports. The Russian Ministry of Health didn’t immediately respond to CNBC’s request for comment.
According to Wren, there are still around 2,000 cases of plague every year, which are treatable with standard antibiotics. “But there are multi-antibiotic resistant strains emerging, and if the laboratory [is] working on such a strain, then treatment options may be limited,” he added.
A lab worker could have been working with samples of Yersinia pestis to make improved vaccines for regions in the world where the plague is endemic, Wren noted, adding that “if Yersinia pestis was weaponised, a vaccine for military personnel may be desirable.”
Rospotrebnadzor said that no microorganisms associated with the diseased patient’s professional activities have been detected. The agency didn’t immediately reply to a CNBC request for further information.
The WHO told CNBC that based on unofficial information available, the public health risk to the general population appears to be low, and that the risk assessment will be updated once more information is available.
— CNBC’s Jenny Lee contributed to this report.
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