Rising Treasury yields push U.S. debt costs higher as debt ceiling looms

Scope Ratings' new report highlights the vulnerability of the United States’ fiscal outlook to higher market rates, maintaining a AA- sovereign rating but flagging a deteriorating debt trajectory. While the agency cites a strong economy, the dollar’s reserve-currency status and deep capital markets as positives, it warns that structural spending pressures and limited political will will keep primary deficits near 3.5% of GDP.

Treasury yields have surged to 5.27% on the 10-year note, surpassing the Congressional Budget Office’s long-term projections, and could add roughly $3.5 trillion to debt over the next decade if they stay elevated. Treasury Secretary Scott Bessent is extending the shift toward short-term borrowing, a tactic that raises rollover costs when rates spike. Meanwhile, the debt ceiling of $41.1 trillion is expected to be reached by early 2027, potentially triggering prolonged partisan battles. The Committee for a Responsible Federal Budget and the Center for Responsible Fiscal Policy both warn that without stronger growth or fiscal reform, the debt burden could approach 160% of GDP by 2036.