US Interest Bill Is Getting Worse As Yields Keep Rising

ZeroHedge, Aug 19, 2026 – Authored by Simon White, Bloomberg macro strategist,

The rise in Treasury yields is inflaming the US’s increasingly untenable interest bill on its debt.

At almost $1.4 trillion, the annual cost of servicing the US’s public debt is greater than the GDP of over 175 of the world’s 195 countries.

Net interest isn’t much better, at just over $1 trillion each year.

And both net and gross are only growing as yields keep creeping higher. US 10-year yields lead the gross interest expense as a percentage of debt outstanding by about six months.

The gross interest expense versus the debt outstanding is about 3.5%, but that’s also a function of so much debt being issued; the ratio was over 5% at the time of the GFC.

But interest is paid out of tax revenue (and more borrowing), so it’s better to look at it in these terms.

Here the picture is pretty bleak, with 20% of tax going towards debt service, a modern-day high.

The CBO projects it will get worse, estimating that close to one in three tax dollars will be used to pay interest by 2036.

Interest bills have risen across the world as deficits have risen and rates have climbed higher.

But the US’s expense is particularly egregious. Only Italy has a larger bill of the main developed countries in GDP terms.

Thirty-year yields recently punched through to 20-year highs, while the 10-year is within about 30 bps of its two-decade top.

There are signs that liquidity in the Treasury market has started to deteriorate, which increases the risk of more unstable yields with an upwards bias.

But the rising interest bill creates a second order risk, as rises in yields make more borrowing reflexively more likely.

It’s not a dynamic that can persist indefinitely without something eventually breaking.

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