The US Treasury auctions billions of dollars in debt securities every year to finance government deficits. However, top financial leaders are growing increasingly concerned that not enough buyers will appear at the next auction, leading to a loss of confidence and higher borrowing costs for Americans.
Leaders warn that if this happens, it could cause lasting damage by shifting the economy into a new, higher interest-rate equilibrium. Gary Cohn, former Trump White House adviser and Goldman Sachs president, stated that a failed debt auction would lead to an unpredictably wide swing in volatility, and rates would move out dramatically if foreign and US investors lack interest.
Jamie Dimon, JPMorgan CEO, also predicted a crack in the bond market, saying “it is going to happen.” Steven Mnuchin, former Trump Treasury secretary, warned that the economic environment will create real issues, which could lead to problems with the bond market.
The government’s growing fiscal deficit, fueled by the proposed $3 trillion to $4 trillion tax and spending cuts bill, will require more auctions of Treasury securities. This has sent a clear signal to investors worldwide: interest rates are on track to rise significantly.
Investors have already shown their concerns through a sell-off in bond markets over recent weeks, signaling a long-term trajectory for higher interest rates. The drop in long-term bond prices means governments must pay higher interest to borrow money, raising the risk of an economic collapse if not addressed.
Source: https://www.axios.com/2025/06/02/us-treasury-auction-debt-interest-rates