As 10-year Treasury yield hits 5%, debt hawks are eyeing a national debt spiral: ‘If this isn’t a wake-up call, I don’t know what will be’

Budget watchdogs have been given fresh cause for concern this week as the rate on 10-year Treasuries has tipped over 5%—a symbolic benchmark for investors and economists. At the time of writing, yields on the 10-year note sat at 5.027%, having climbed steadily since February of this year.The 52-week high came after the U.S. Treasury intervened in the bond market, with a multi-billion-dollar buyback scheme last month in an attempt to improve market liquidity.

But after a brief drop, yields resumed their march higher ahead of this week’s Federal Open Market Committee (FOMC) meeting, and ongoing tensions in the Middle East contributing to inflationary fears.

With yields now notching over 5%, longer-term interest rates across the economy are increasing, pushing up borrowing costs on the national debt as a result. Budget hawks have long worried that the U.S. might enter a debt spiral—a cycle where interest payments cause debt to grow because more borrowing is needed to finance that debt.

As Maya MacGuineas, president of the........

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