The US national debt exceeded $40 trillion for the first time, reaching $40.05 trillion as of August 19, according to the US Department of the Treasury. This milestone comes approximately 4.5 years after the debt first surpassed $30 trillion.

Years of increasing budget deficits have been the primary driver of this surge, exacerbated by pandemic stimulus packages. The Department of the Treasury's report highlighted that the July budget deficit alone reached $432.3 billion, the highest since March 2021. The year-to-date deficit is approaching $1.8 trillion, exceeding the figure for the same period last year. A decade ago, the US government debt stood at $19.4 trillion, underscoring the rapid accumulation of debt.

This escalating fiscal situation has had notable impacts on financial markets, particularly in recent months. The US Department of the Treasury announced on August 19 that it would increase the size of its long-term bond buybacks, a move likely influenced by these market dynamics.

US Treasury bond yields have seen a sharp rise since late June, reaching levels not observed since the global financial crisis. During that crisis, the US Federal Reserve (Fed) was compelled to cut interest rates to near zero. In late 2008, the Fed also implemented a substantial bond purchase program to help lower interest rates.

Ha Thu (according to Reuters)