Treasury yields highest since 2007 after US debt hits a record $33 trillion

• US national debt has ballooned to $33 trillion for the first time.
• The federal government could face another shutdown by the end of September.

Treasury yields hit a 16-year high on Wednesday after the US government's debt burden hit a record $33 trillion this week.

The surge comes as the Federal Reserve concludes its September policy meeting and is expected to hold interest rates steady.

The Fed's rate rises in recent months have increased the cost of federal borrowing, with the rate on 10-year Treasurys standing at about 4.36%, up from as low as 0.32% in early 2020.

Federal spending increased by roughly half between 2019 and 2021, which contributed to the debt record, the Treasury Department said on Monday.

It also cited tax cuts, coronavirus stimulus packages and lower tax revenues from high pandemic unemployment as other contributing factors in the spike.

The $1.58 trillion increase since the debt ceiling was lifted in June has left some experts concerned about a potential wider crisis.

These include markets commentator Larry McDonald, who last month warned of a "mind-blowing hole" in the public finances.

Billionaire investor Ray Dalio cautioned that the US is at the start of a "classic late, big-cycle debt crisis" characterized by a shortage of buyers for its government bills and bonds. Veteran economist Nouriel Roubini has also expressed similar concerns.

Fitch downgraded the US's long-term credit rating in August, citing a "steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters."

Meanwhile, another government shutdown looms unless Congress come to a funding agreement by September 30.