calm

Published on
20/08/2026 – 11:18 GMT+2

The US national debt now stands at a record $40 trillion (€34.4tn), while the Treasury has responded to the bond market pressure by pledging to buy back far more of its own older securities.

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Washington’s two announcements landed on the same day and represent two symptoms of the same underlying strain: a government borrowing at a record pace just as buyers of its longest-dated debt are demanding higher returns to keep lending.

Buybacks work like a targeted repurchase. Rather than printing new money, the US Treasury uses cash it already has to repurchase older, harder-to-trade bonds from investors, improving liquidity without changing the total stock of debt.

From 9 September, the maximum size of each buyback operation in the 10-to-20-year and 20-to-30-year markets will at least double, from $2 billion (€1.7bn) to $4 billion (€3.4bn), running through the next quarterly refunding on 4 November.

The US Treasury said the change reflects “strong sponsorship from market participants” in that part of the curve, but the timing of the decision was no accident.

The 30-year yield had climbed on Tuesday to its highest level since 2007 amid what analysts called a buyers’ strike stretching back to late June, aggravated by a swelling supply of corporate debt tied to AI data centre spending.

Yields duly fell after Wednesday’s announcement, with the 30-year dropping roughly 9 basis points and the 10-year around 6, and Wall Street rallied.

Asked whether Americans should worry about the volatility, US President Donald Trump simply said: “No, I don’t think so.”

However, not everyone is convinced the fix goes deep enough.

The size of the increase is modest next to the $32 trillion (€27.5tn) Treasury market it is meant to steady, and notable economist Mohamed El-Erian suggested the outsized market reaction reflected hopes of broader intervention to come rather than the direct effect of the buybacks themselves.

Thomas Simons, chief US economist at Jefferies, said the announcement broke with Treasury’s usual pattern of steady, well-flagged communication about its borrowing plans and felt “shot from the hip”.

How the US national debt reached $40 trillion

The debt figure, confirmed by US Treasury data covering Tuesday, splits into $32.27 trillion (€27.75tn) held by the public and $7.78 trillion (€6.69tn) owed between government accounts.

It arrived roughly two fiscal years earlier than expected as the US Congressional Budget Office projected in May 2023 that the threshold would not be crossed until 2028, and it came remarkably fast even by recent standards: $39 trillion (€33.5tn) was reached only in March, $38 trillion (€32.6tn) the previous October.

The US government borrowed $1.8 trillion (€1.5tn) in the first ten months of this fiscal year alone, already more than it borrowed in the whole of the last one, as spending on Social Security, Medicare, defence and interest payments continues to outrun revenue.

“The national debt is not just a number on the government’s balance sheet,” said David Young, president of the Conference Board’s CEO Center, noting it shapes the financial decisions Americans make daily.

The two stories feed each other.

A bigger debt load makes investors warier about lending long-term, which pushes yields higher. In turn, higher yields then raise the government’s own interest bill, adding further to the debt the US Treasury has to finance next.

Wednesday’s buyback expansion may ease the immediate pressure, but it does nothing to slow the borrowing driving it.

A message attributed to Iran’s Supreme Leader Mojtaba Khamenei has promised “unforgettable lessons” to Washington during their escalating conflict. But it also homed in on another theme that tempered some of the fire of his warnings against the US, amid eight nights of renewed fighting between the two countries.

Khamenei, who has not been seen or heard from since being made supreme leader in March, said Iranians must uphold “sacred unity” as a fundamental imperative, particularly against the United States.

His message also stated that it was a duty for the Iranian population and officials to refrain from “division, political disputes, and increases in social differences”. Iran’s enemies, he said, likely referring to the US and Israel, “must not detect any sign of weakness from us”.

The call for national unity comes against the backdrop of events in June, when another Khamenei statement stirred debate and controversy among some of the most hardline supporters of the Islamic Republic regarding the recently signed memorandum of understanding (MoU) with the US.

Khamenei said that although he “held a different view” about the agreement to pause four months of fighting, he approved it after President Masoud Pezeshkian, as chairman of the Supreme National Security Council, accepted responsibility for the deal.

This fired up unyielding supporters of the Islamic Republic who continue to take to city squares and streets at night with backing from armed security forces, angered about the deal.

Critics believe Khamenei was being forced into accepting a bad deal, and hardline clerical lawmaker Mahmoud Nabavian even resorted to reading from classified material on live television in an apparent attempt to derail the arrangement. He was removed from the parliament’s National Security and Foreign Policy Committee earlier this month.

Others went as far as accusing officials of treason, and the president and other officials linked to the deal were heckled during the funeral ceremonies for assassinated Supreme Leader Ayatollah Ali Khamenei earlier this month.

The MoU has been suspended by Tehran but was already effectively on the verge of collapse after Iran and the US traded fire over control of the strategic Strait of Hormuz over the past week.

Projection of military and political unity

Since Mojtaba Khamenei’s statement on Saturday, other officials have strived to present a united front between armed forces and the political and diplomatic apparatus, each with their own views on the MoU.

Ali Abdollahi, the head of Iran’s wartime joint command, vowed that the armed forces will heed Khamenei’s directive for “sacred unity and national cohesion”.

But he also warned the US, which he referred to as a “big Satan and criminal enemy”, that it will face a “decisive and destructive response” for its recent attacks on Iran, which has seen bridges, roads, and other civilian infrastructure destroyed.

President Pezeshkian thanked the supreme leader’s “wise” message and highlighted the part where he urged “trust” in the heads of government, parliament and judiciary.

“Adherence to the means of sacred unity and refraining from division and discord is the key to victory at this historic juncture,” he wrote on X.

Mohammad Bagher Ghalibaf, the parliament speaker who has faced harsh criticism from hardliners as chief negotiator in talks with the Americans, said following Khamenei’s directive is critical to Iran’s success.

“We must regard obedience to this religious and national decree of the supreme leader of the revolution as an important part of our historical role in national resistance and governance of the country,” he also tweeted in Persian on Sunday.

These messages appeared aimed at foreign audiences, coming shortly after senior US officials, anonymously briefing media in Washington, tried to blame the Hormuz escalation on an “errant” hardline faction inside Iran seeking to obstruct negotiations.

The state-linked Khorasan newspaper published an editorial on Sunday saying that Khamenei’s latest statement carried the message that “criticism is accepted, but never accusations” against officials.

“To those who claim to be revolutionaries, the supreme leader’s message was an ultimatum for you: Stop telling lies about the authorities,” the article read.

Iran’s military and political officials did not directly address the claim earlier this month, but released more statements proclaiming a unified view on how to address the conflict and regarding control of the Strait of Hormuz.

Speaking during an interview released on Sunday, Iran’s Foreign Minister Abbas Araghchi continued to back a negotiated end to the war, which has seen Iran’s civilian infrastructure systematically targeted in US air strikes over the past week.

“If we had reached the [April] ceasefire 10 days earlier, we still had Larijani, Khatib, Asaluyeh and Foolad Mobarakeh,” the chief diplomat said in reference to assassinated security chief Ali Larijani, intelligence minister Esmail Khatib, and the country’s heavily bombed petrochemical facilities and steel plants.

But as tit-for-tat strikes continue between the two sides, there is no sign of both parties returning to the negotiating table.