Federal Reserve Chairman Kevin Warsh told Congress the Fed isn't in the bailout business for the U.S. Treasury, though he noted an escape clause for crises like the 2020 pandemic and 2008. Near-record peacetime budget deficits mean the federal government must issue roughly $2 trillion a year in additional Treasury bills and bonds.

Meanwhile, the Treasury market is changing shape: patient investors are making way for faster-moving opportunistic players dependent on potentially fragile funding. Superficially, the market looks healthy. Turnover, at $1.2 trillion a day, is up 11% this year. At auctions, there are still roughly $2.30 to $2.50 of bids for every $1 of bonds for sale.

Beneath the surface, things look more worrisome. The 30-year Treasury yields 0.5 percentage point more than the 10-year, up from 0.2 in early 2025. Treasury prices get more sensitive to risks as maturity lengthens. The relatively steeper rise in 30-year yields means investors are more wary of future deficits, inflation or random shocks.