US Treasury Debt in Crisis: Sudden Mass Selloff! US Debt Breaks Through $3.9 Trillion

While requesting an additional $200 billion in military spending for Iran conflicts at the Pentagon, and Trump calling it “just small money,” on March 18 local time, the U.S. Treasury Department released the latest data showing that U.S. national debt has surpassed $39 trillion.

On March 20 local time, U.S. Treasury bonds faced another heavy sell-off. The yield on the 10-year U.S. Treasury jumped sharply, approaching 4.39% at press time, with an increase of over 3%.

U.S. Treasury bonds declined as bond traders increased bets that the Federal Reserve’s rate hike probability by October has risen to 50%, due to market concerns that prolonged Middle East conflict could push up global inflation. Additionally, short-term interest rate futures pricing reflects expectations of a rate hike by the Fed in December.

Sources pointed out that the added uncertainty from the Middle East war has heightened traders’ worries, as soaring energy prices could exacerbate inflation and also bring downward pressure on the economy.

Gennadiy Goldberg, head of U.S. interest rate strategy at TD Securities, said, “As the Iran conflict escalates and prolongs, the bond market is clearly worried about further inflationary pressures. The market has stopped pricing in rate cuts in 2026 and is now factoring in a certain probability of rate hikes, which is driving yields sharply higher.”

U.S. Treasury Surpasses $39 Trillion

Monthly interest payments amount to $90 billion

According to the latest data released by the U.S. Treasury Department on March 18, as of March 17, the total federal debt has exceeded $39 trillion. Analysts expect that before the midterm elections in fall, U.S. debt will break through $40 trillion.

Budget oversight agencies and economists agree that the growth rate of U.S. borrowing is “unsustainable,” and the U.S. is “clearly heading in the wrong direction.”

In recent years, U.S. debt has grown rapidly. By July 2024, U.S. debt surpassed $35 trillion; by November, it exceeded $36 trillion; by August 2025, it broke $37 trillion, and in just two months, it surpassed $38 trillion. Currently, the total U.S. debt exceeds $39 trillion, only about five months after reaching $38 trillion in late October 2025.

Michael Peterson, CEO of the Peterson Foundation, estimates that at the current growth rate, U.S. debt will reach an “astonishing” $40 trillion before the fall midterm elections. The foundation notes that the latest $1 trillion increase in debt took less than five months, a pace unprecedented in modern U.S. history outside of wartime or severe financial crises.

The Peterson Foundation’s website shows that U.S. debt increases by $4.8 million per minute, $288 million per hour, and $6.9 billion per day. (Source: CCTV News)

The foundation states that the U.S. fiscal situation has deteriorated to the “worst among comparable countries.” The Fortune website pointed out that the most worrying aspect is the huge cost of just servicing this debt. It is estimated that in the 2026 fiscal year (October 1, 2025 – September 30, 2026), net interest payments on U.S. debt will exceed $1 trillion. In just the first three months of 2026, net interest payments reached $270 billion, already surpassing the same period’s defense spending. With an average monthly interest payment of $90 billion, this amount could build eight advanced Ford-class nuclear-powered aircraft carriers or 900 F-35 fighters (Note: one Ford-class carrier costs about $11 billion; one F-35 costs about $1 million).

This ongoing fiscal burden will be extremely heavy: over the next 30 years, U.S. government interest payments are projected to reach nearly $100 trillion, far exceeding any major federal program. Michael Peterson said, “Interest payments are the fastest-growing ‘item’ in the federal budget.”

For ordinary Americans, the average personal interest expense over the next decade is at least $47,000 per person. A survey shows that 90% of Americans believe rising debt is increasing living costs and driving up borrowing costs.

The Government Accountability Office (GAO) warns that rising government debt will impact Americans and businesses: higher mortgage and auto loan costs; reduced corporate investment leading to lower wages; rising prices for goods and services. Advocates for balanced budgets warn that the long-term trend of increasing borrowing and interest costs will force Americans to make tougher financial choices.

A forecast report by the Congressional Budget Office (CBO) released in February projects that from fiscal year 2026 to 2036, U.S. debt as a percentage of GDP will soar from 101% to 120%, breaking the post-WWII record of 106%.

The Wharton School’s budget model at the University of Pennsylvania previously predicted that without major policy adjustments, within about 20 years, the U.S. will be unable to roll over its accumulated debt, forcing the government either to default explicitly or to implement implicit default through inflation.

Magnus, president of the non-profit Committee for a Responsible Federal Budget, said the consequences of unchecked U.S. fiscal policy are already evident and will worsen: higher debt will increase inflationary pressures, crowd out economic investment, make interest payments the main burden of defense spending, and make the U.S. more vulnerable to crises and geopolitical shocks, potentially triggering a fiscal crisis. “No matter how we measure our fiscal health, we are clearly heading in the wrong direction.”

War spending is a key driver of rapid debt growth

Trump: Additional $200 billion military budget is “small money”

Where does such massive debt come from? AP reports that recent increases in U.S. debt are mainly driven by war expenses, large-scale fiscal spending during the pandemic, and tax cuts.

U.S. media reports on the unprecedented scale of debt reaching over $39 trillion mention that this comes just weeks after the U.S. launched military strikes against Iran, which led to soaring oil prices and economic pressure.

According to White House National Economic Council Director Kevin Hasset, the U.S. has already spent over $12 billion on military operations against Iran since February 28. A senior U.S. government official on March 18 said the Pentagon has requested approval from the White House to apply for over $200 billion in budget funds from Congress for Iran-related warfare. The funds are intended for “urgent production increases of key weaponry” to replenish munitions used in the Iran military operations.

President Trump and Defense Secretary Hegseth confirmed on March 19 that the Pentagon has applied for an additional approximately $200 billion to support operations against Iran. However, some lawmakers questioned this request, demanding detailed explanations from the Pentagon.

Hegseth said at a press conference that the budget request is to ensure that U.S. military operations already underway or planned are “adequately funded,” and added that the amount might be adjusted.

On the same day, a reporter asked Trump at the White House why, if he expects “Iran conflict won’t last long,” the Pentagon still needs such high military spending. Trump seemed to imply that the budget request covers not only the current Iran conflict but also other “multiple factors.” He said that in this “turbulent” world, the related budget is just a small expense for the U.S. military to “maintain its lead.”

Reports indicate that the budget request has not yet been formally submitted to Congress but has already faced criticism from Democratic and some Republican lawmakers. Senator Jack Reed, a Democrat on the Senate Armed Services Committee, called the request “unacceptable,” especially as Americans face rising costs for gasoline and other essentials. He questioned whether the Trump administration’s decision to strike Iran was wise given the public’s hardships.

According to Reuters, some Democratic lawmakers also questioned why the Pentagon, which “has plenty of money,” now needs more. The FY2026 defense appropriations bill signed by Trump in February provides nearly $840 billion in discretionary funds, and the FY2025 “Big and Beautiful” tax and spending bill allocates $156 billion to defense. Together, these nearly $1 trillion in appropriations are especially stark as U.S. debt surpasses $39 trillion.

Senator Susan Collins, Republican chair of the Senate Appropriations Committee, told reporters on the evening of the 18th that the requested defense budget is “significantly higher than expected” and called for a public hearing on the budget request.

AP notes that although Republicans, including Trump, control Congress, many conservative-leaning GOP lawmakers lack enthusiasm for military actions and large expenditures. Meanwhile, most Democrats are likely to oppose the budget request and demand more detailed explanations regarding the goals of military action against Iran. Some Democrats have previously questioned the legality of the White House’s plans to strike Iran.

To get the budget approved, Republican leaders may choose either to negotiate with Democrats in a “tug-of-war” over the terms or to strike deals on other issues of concern to Democrats, which could further increase the overall budget.

Easing sanctions on Iran, Russia, and Venezuela oil

Trump repeatedly acts to curb oil prices

The ongoing Iran conflict’s impact on oil prices, U.S. inflation, and the overall economy is intensifying. Owen John Anthony, an economist nominated by Trump as head of the Bureau of Labor Statistics, warned that the U.S. cannot afford oil prices over $100. U.S. media describe the Trump administration as facing a “fragile moment.”

According to CCTV International, U.S. Treasury Secretary Janet Yellen stated on March 19 that the U.S. has not attacked Iran’s energy infrastructure and has allowed Iranian oil to continue flowing through the Gulf region, with possible future easing of sanctions on Iranian offshore oil.

Additionally, the U.S. may release strategic petroleum reserves again to suppress oil prices.

Recently, the Trump administration has introduced several policies to curb rising oil prices. On March 18, it announced a 60-day suspension of the Jones Act, lifting shipping restrictions between U.S. ports. The Jones Act requires ships transporting goods between U.S. ports to be U.S.-built, registered, and crewed by Americans.

On the same day, the Trump administration relaxed trade restrictions on U.S. companies dealing with Venezuela’s oil industry. Last week, it also eased sanctions on Russian oil. On March 11, the U.S. Energy Department announced the release of 172 million barrels from strategic petroleum reserves.

U.S. media warn that soaring oil prices and geopolitical conflicts will cost the U.S. economy dearly, especially with rising gasoline and airline transportation costs. For the Trump administration, which emphasizes “affordability” in economic policy, this is a “fragile moment.”

U.S. emergency approves $16.5 billion in arms sales to Middle Eastern countries

On March 19, the U.S. State Department announced approval of about $16.5 billion in military sales to the UAE, Kuwait, and Jordan, including radar, counter-drone systems, and other military equipment.

Additionally, the U.S. approved about $7 billion in arms sales to the UAE. Since this sale expands previous agreements, the State Department did not issue a separate announcement. U.S. officials said these undisclosed deals include the sale of Patriot missiles worth about $5.6 billion to the UAE.

Special commentator Su Xiaohui notes that after the U.S.-Israel strike on Iran on February 28, the U.S. continues to promote regional arms sales, approving a new $16.5 billion deal with Arab countries on March 6. This ongoing arms sales effort benefits the military-industrial complex’s future profits.