CBO: U.S. pays $3 billion daily in debt interest; yen support cost $10 billion
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The U.S. Treasury pays more than $3 billion a day in interest on the national debt, the Congressional Budget Office reported, with total net interest payments reaching $963 billion in the first 10 months of fiscal 2026. The Treasury also spent $10 billion last week to stabilize the Japanese yen, supporting the currency of the largest foreign holder of U.S. government debt.
Record Interest Costs
Net interest on public debt totaled $963 billion from October 2025 to July 2026, a 14% increase from the same period a year earlier, according to the CBO. Daily interest payments averaged $3.18 billion over the 303-day period, reflecting a larger debt load and higher long-term interest rates. CBO Director Phil Swagel noted that declines in short-term rates partially offset the increase. The federal debt has climbed to nearly $40 trillion.
Rising Deficits
The federal deficit reached $1.8 trillion in the first 10 months of the fiscal year, $169 billion more than last year’s shortfall. The CBO now projects the full-year deficit at $2.1 trillion, $200 billion above its February estimate. The U.S. debt-to-GDP ratio stands at 122%, heightening concerns among fiscal hawks that lenders may demand higher risk premiums, further pushing up interest costs. Bridgewater Associates founder Ray Dalio has warned of a potential ‘debt-induced heart attack’ as interest payments crowd out public spending.
Treasury Yen Support
Last week, Treasury Secretary Scott Bessent confirmed that the U.S. spent $10 billion to backstop the yen, a move aimed at stabilizing the currency and the broader Asian region. Japan is the largest foreign holder of U.S. government debt, with $1.09 trillion as of May 2026. If Japan were to sell U.S. bonds to support its own currency, yields on U.S. debt could rise, undermining Treasury market stability. Bessent’s action, previewed in a to-do list at a July cabinet meeting, underscores the strategic importance of the Japanese economy to U.S. fiscal health.
What's Next
The Treasury is expected to release updated borrowing projections in early September, which may revise interest cost forecasts further. Whether debt service costs will prompt legislative action on deficit reduction remains uncertain, while market reactions to the yen intervention could signal shifts in global bond demand.
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CBO: U.S. pays $3 billion daily in debt interest; yen support cost $10 billion
