The Treasury has crossed a line that is rarely crossed.
By Q3 2025, U.S. interest payments will reach 981 billion dollars, more than 1.2 TRILLION annualized ๐ฃ
This is more than the entire U.S. defense budget planned for 2026 (~900 billion dollars).
Let that take its course.
The United States now spends more on debt service than on its defense.
In Q1 2026 alone, interest payments reached 179 billion dollars, up from 160 billion dollars a year earlier, an increase of 13% in just 12 months ๐
Today, 19% of all federal revenues go directly to bondholders.
By 2035, this figure rises to 22%.
This is not politics.
It's math.
Every fifth dollar collected is lost before funding defense, Medicare, or Social Security.
Meanwhile, cracks are forming in Treasury auctions โ ๏ธ
โข The August 2025 10-year auction was trimmed by 1.1 basis points, the first in six months.
โข Auction coverage ratios are declining.
โข Primary dealers are absorbing more supply as real buyers pull back.
It's a slow demand destruction.
Now comes the real problem: the refinancing wall ๐งฑ
Trillions of dollars in Treasury bonds are maturing over the next 24 months, rolling into much higher rates.
Average rate on negotiable debt: 3.36%
๐๏ธ Five years ago: 1.55%
The debt is increasing by $6.17 billion per day โฑ๏ธ
. The Treasury has two options, neither of which is good:
1๏ธโฃ Accept higher yields โ deeper deficits โ accelerated debt spiral.
2๏ธโฃ The Fed intervenes with yield curve control โ money printing โ currency devaluation ๐จ๏ธ
Japanese 30-year yields are rising, unwinding carry trades. Capital is coming back home. One of the largest foreign buyers is pulling back ๐ฏ๐ต
Gold at $4,596 ๐ฅ
Money at $90
Raw materials booming ๐พ
This is not an inflation panic.
It's the erosion of trust.
Bond markets are not screaming.
. They whisperโฆ then suddenly demand much more.
Interest exceeding defense spending is the canary.
. Most are not looking yet.
They will do it. ๐