US interest bill tops $1 trillion, but no 'fiscal apocalypse' yet
TLT•Washington's annual interest bill has topped $1 trillion for the first time. TD Securities expects it to reach $1.1 trillion in fiscal 2026 and, if yields and issuance stay roughly unchanged, $1.6 trillion by fiscal 2029.
1. Rising interest costs
Interest costs have risen 215% in five years. TD Securities analysts Gennadiy Goldberg and Molly Brooks estimate the bill will reach $1.1 trillion at the end of fiscal 2026, a record share of federal spending.
2. Rates and debt maturity
If yields and issuance remain roughly unchanged, TD projects Treasury financing costs of $1.4 trillion in fiscal 2027, $1.5 trillion in fiscal 2028 and $1.6 trillion in fiscal 2029. A further 100-basis-point increase in rates across the curve would add $430 billion in interest payments in fiscal 2027 alone; heavier use of short-term bills also makes costs more sensitive to Fed rate hikes.
3. No crisis yet, analysts say
TD said an average yield of 3.4%, still well below nominal GDP growth, and an average debt maturity of 5.9 years mean higher rates feed through slowly. The analysts said fiscal concerns are contributing to the Treasury selloff, but called fears of a fiscal apocalypse overstated.
