US 10-year yield tops 5% as Bessent's grow-out-of-debt strategy faces test

September 15, 2026 at 03:00 PM2 min

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The US 10-year Treasury yield exceeded 5% on Monday, a level rarely seen since the early 2000s. Treasury Secretary Scott Bessent has argued that 3% economic growth can reduce the debt burden, but economists and the IMF project growth near 2% for 2027-2028. Bessent faces a House Financial Services Committee hearing Tuesday morning.

Key Facts

The US 10-year Treasury yield exceeded 5% on Monday, a level rarely traded since the early 2000s.
Treasury Secretary Scott Bessent has repeatedly said 3% economic growth can reduce the US debt burden.
US debt held by the public rose roughly 10% in 2023 and 7% in 2024, with annual deficits topping $1.6 trillion.
Bloomberg's median economist forecast and the IMF project US GDP growth of little more than 2% for 2027 and 2028.
President Donald Trump wants Congress to approve $1.5 trillion in defense spending, a 44% increase.

Yield Surge

The 10-year Treasury yield, which Bessent has called his benchmark, exceeded 5% on Monday. That level has rarely been traded since the early 2000s. The rapid increase in yields has added to concerns about long-term US debt sustainability.

Growth vs. Debt

Bessent said in August that "global growth is the way to take care of this mountain of debt." He reiterated last week that with spending restraint and 3% growth, "we grow our way out of this." In 2023 and 2024, the US posted near-3% inflation-adjusted growth, yet debt held by the public climbed roughly 10% and 7% respectively. Douglas Holtz-Eakin, president of the American Action Forum and former CBO director, said: "You can't grow your way out of it. It's not numerically reasonable."

Fiscal Pressures

Unlike the late 1990s, when growth above 4% coincided with fiscal surpluses, today's dynamics are reversed. Tax rates are much lower after multiple Republican-led reductions, and lawmakers from both parties have generally voted to raise federal spending. An aging population is boosting outlays in entitlement programs, and President Trump wants a $1.5 trillion defense budget, a 44% increase. Bessent predicts the AI boom will accelerate US growth, but the consensus forecast is for GDP gains of little more than 2% in 2027 and 2028.