Bond markets are growing increasingly nervous about the trajectory of US government debt, with Treasury secretary Scott Bessent forced into interventions that critics say betray weakness rather than confidence. Bessent recently pledged to double the rate at which the US Treasury buys up long-dated bonds in an effort to push down yields, following an earlier move to help prop up the Japanese yen. Analysts see these actions as tacit admissions that Washington fears major holders of US debt, such as Japan, might offload their holdings, further destabilising a market already unsettled by soaring borrowing costs.

Several overlapping pressures are driving the sell-off: persistent inflation fears linked to the Iran conflict and oil prices, plus uncertainty over incoming Federal Reserve chair Kevin Warsh; a wall of corporate debt from AI "hyperscalers", who have issued $219bn (£160.5bn) so far this year to fund datacentre expansion, competing with treasuries for investor cash; and deepening doubts about US fiscal discipline. US public debt has surged past $40tn, worsened under Trump's second term by tax cuts unmatched by tariff revenue or spending cuts, with the Congressional Budget Office projecting debt could rise from 100% of GDP today to 175% within 30 years without significant policy change. Thirty-year Treasury yields have climbed to levels last seen before the 2008 financial crisis.