The US federal debt crossed $40 trillion for the first time this week, reaching roughly 126% of gross domestic product, as the government's annual deficit now stands at 7.5% of GDP and interest payments exceed $1 trillion a year, surpassing the entire defence budget.
President Donald Trump said on Friday that GDP growth would resolve the debt problem "very easily", though the economy expanded at an annualised rate of just 1.5% from April to June. Treasury Secretary Scott Bessent pledged to double buybacks of long-term bonds to help lower rates, after 30-year yields climbed above 5.3%, the highest since 2007. Japan has sold large volumes of US Treasuries in recent weeks to stem the yen's decline.
Trump also suspended tariffs on 300,000 tonnes of ground-beef imports for 90 days and warned Iran that military intervention remains an option, saying "if we have to use it, we will."