US Debt Surpasses $40 Trillion: Chinadaily.com.cn Warns of Global Risks
Total US government debt surpassed $40 trillion in 2026, driven by persistent fiscal deficits, large-scale spending commitments, and the economic shocks of the COVID-19 pandemic, Chinadaily.com.cn reported. This rapid expansion coincides with a significant upward movement in US Treasury yields, creating complex challenges for domestic borrowing costs and global financial stability.
Treasury Yields Climb Past Five Percent Amid Tighter Monetary Policy
These benchmark yields dictate the pricing for a wide array of financial assets and debt instruments, including corporate bonds, mortgages, auto loans, and student loans. The persistent rise in long-term yields reflects growing investor anxiety regarding the long-term sustainability of US public finances, alongside ongoing inflation concerns and expectations of tighter monetary policy.
Higher yields have already fed directly into consumer credit markets. The average rate on 30-year US mortgages has hovered around 7 percent, substantially increasing borrowing costs for households. Meanwhile, the International Monetary Fund has warned that climbing bond yields in advanced economies could push up global financing conditions, squeezing external funding for infrastructure, healthcare, and education in developing nations.
Debt Expansion Driven by Structural Deficits and Pandemic Response
US government debt has quadrupled from approximately $10 trillion recorded during the 2008-09 global financial crisis. Following the crisis, the US economy grew at an average GDP rate of 2.4 percent through the 2010s, yet national debt still approached $20 trillion by the end of the decade. Tax reductions, increased government spending, and the fiscal response to the COVID-19 pandemic accelerated this trajectory. The pandemic pushed annual fiscal deficits above $3 trillion, and large deficits have remained a structural feature of the economy rather than a temporary anomaly.
Managing this volume of liabilities requires immense refinancing operations.
US Treasury Securities Create Systemic Global Vulnerabilities
US Treasury securities serve a dual purpose as both government financing mechanisms and foundational assets across global capital markets, acting as collateral and liquidity instruments. This integration creates systemic vulnerabilities. If major holders of US debt face pressure to sell bonds for liquidity or currency stabilization, market volatility could easily transmit across international borders. Chinadaily.com.cn characterizes the visible fiscal sustainability risk as a gray rhino, while a sudden, unpredictable liquidity crisis serves as the black swan scenario for global markets.
As sovereign debt ratings face downgrades from major agencies, the traditional status of US Treasuries as unconditional risk-free assets encounters renewed scrutiny. Corporations, institutional investors, and global financial institutions increasingly must evaluate how long capital markets can absorb expanding debt supplies without triggering disorderly market adjustments.