> ## Content Index > Fetch the complete content index at: https://www.leadlagreport.com/llms.txt > Use this file to discover other available public pages before exploring further. # The Treasury's Average Borrowing Rate Hit 3.57%. The 10-Year Is Still 1.3 Points Higher. - URL: https://www.leadlagreport.com/the-treasurys-average-borrowing-rate-hit-3-57-percent/ - Published: 2026-11-12T14:00:00.000Z - Updated: 2026-11-12T14:00:04.000Z - Description: The average rate on marketable Treasury debt is the highest since 2008, interest now outspends defense and the gap to market yields says the bill keeps rising. - Author: Michael A. 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Paid social ad spend is advisor-paid and not included.* --- ### The government's average borrowing cost just reached its highest level since 2008\. The market is still charging it more than that. The average interest rate on marketable Treasury debt was 3.57% at the end of October, up from 3.52% in September and 3.39% a year earlier.\[1\] That is the highest month-end reading since September 2008.\[1\] The low for this series came in January 2022, at 1.42%.\[1\] The 10-year Treasury yield closed at 4.88% on Nov. 9, and it averaged 5.13% in October.\[2\] In other words, the Treasury is still paying about 1.3 percentage points less on its existing debt than the market charges on new 10-year borrowing. Every bill that matures and every note that gets refinanced closes a little of that gap. ![Average interest rate on marketable Treasury debt versus the 10-year Treasury yield, 2001 to October 2026](https://storage.ghost.io/c/b8/9e/b89e006c-adc9-4384-b804-e802e23b544e/content/images/2026/11/chart_1_avg_rate.png) ## Why the average moves slowly The average rate is a blend of everything the Treasury owes. A 10-year note sold in 2020 still carries the coupon it was issued with, and it will until it matures. That is why the average kept drifting lower for more than a year after the Federal Reserve started hiking in 2022, and why it has climbed steadily ever since. Look at the shaded area on the chart. Since 2022, the 10-year yield has sat above the average rate almost the whole time. As long as that is true, the average has only one direction to go as old debt rolls off. It rose 0.18 points over the last twelve months alone.\[1\] The timing of when it catches up depends on how much of the debt is short-term and how quickly the Treasury issues new longer bonds. The direction does not. This is the part of the fiscal story that does not need a new law, a new war or a recession to get worse. It is already locked in by the gap between what the Treasury pays and what the market asks. ## Interest now outspends defense The Bureau of Economic Analysis puts federal interest payments at a seasonally adjusted annual rate of $1.33 trillion in the third quarter.\[3\] National defense spending, consumption plus investment, was $1.23 trillion over the same period.\[4\] Interest first moved ahead of defense in the first quarter of 2024, and the gap has grown to about $96 billion.\[3\]\[4\] ![Federal interest payments versus national defense consumption spending, quarterly, 2000 to Q3 2026](https://storage.ghost.io/c/b8/9e/b89e006c-adc9-4384-b804-e802e23b544e/content/images/2026/11/chart_2_interest_defense.png) The pace matters more than the level. Interest payments were running at about $532 billion a year in the first quarter of 2021.\[3\] They are now 2.5 times that, and they were still up 7.3% from a year earlier in the third quarter.\[3\] On a fiscal year basis, federal interest outlays came to about $1.36 trillion in the year that ended Sept. 30, up from about $1.22 trillion the year before.\[5\] Total public debt stood near $39.5 trillion at the end of the second quarter.\[6\] Defense is useful as a yardstick because it is the largest discretionary item in the budget and one that both parties argue about every year. Interest does not get that argument. It gets paid automatically, and it is set by the bond market rather than by Congress. ## A fifth of every dollar coming in Another way to see the same pressure is to compare interest to what the government takes in. Federal interest payments were 21.1% of federal current receipts in the second quarter.\[3\]\[7\] That share has stayed above 21% since the middle of 2024, a level the series had not reached since 1997.\[3\]\[7\] In the first quarter of 2022, it was 12.5%.\[3\]\[7\] ![Federal interest payments as a share of federal current receipts, quarterly, 1970 to Q2 2026](https://storage.ghost.io/c/b8/9e/b89e006c-adc9-4384-b804-e802e23b544e/content/images/2026/11/chart_3_interest_share.png) The chart also shows that the U.S. has been here before. Interest took more than a quarter of receipts for much of the 1980s and early 1990s.\[3\]\[7\] What brought it down then was a long run of falling rates and, for a few years, a budget surplus. The 10-year yield in the 1990s was falling from much higher levels.\[2\] This time it is starting from a low base and rising. The share has flattened over the last two years because receipts have grown too. That is the mild part of the picture. If growth slows and receipts soften while the average rate keeps catching up to the market, the share can move higher without anything else changing. ## The other side of the argument None of this means a crisis is close. The Treasury still borrows in its own currency, and the average rate is well below where it was in the 1990s.\[1\] A cut in short-term rates would bring the cost of new bills down quickly, and bills are where the Treasury does much of its refinancing. It is also fair to say the 10-year is not the only rate that matters. A lot of the debt that rolls over is short-term, and those rates track the Fed more than the long end. If the Fed eases, the gap between the average rate and new borrowing costs could shrink from the short side. But the Fed raised the top of its target range to 4.00% in September, from 3.75%, and the 10-year has been near 5% for much of the fall.\[8\]\[2\] The easy version of the story requires rates to fall. The data so far shows them rising. ## What to watch The monthly average rate is the cleanest gauge. It is published within days of each month end, and every tick higher is real interest the government will owe for years.\[1\] The second is the share of new issuance going to longer bonds versus bills, because that decides how fast the average reprices and how much supply the long end has to absorb. The third is the gap between the 10-year yield and the average rate. When it narrows, the pressure on the budget eases. When it widens, the budget is being repriced in real time. For markets, the practical point is that fiscal math now feeds back into the bond market. Higher interest costs mean larger deficits, larger deficits mean more issuance, and more issuance has to find buyers at some price. That loop does not decide where yields go next week. It does shape the backdrop for anyone who owns duration, and it is a big part of why long-term yields have been harder to push down this year. ## Notes 1. [U.S. Treasury Fiscal Data, Average Interest Rates on U.S. Treasury Securities, Total Marketable, monthly, through Oct. 31, 2026](https://fiscaldata.treasury.gov/datasets/average-interest-rates-treasury-securities/average-interest-rates-on-u-s-treasury-securities) 2. [FRED, Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity (DGS10), Federal Reserve](https://fred.stlouisfed.org/series/DGS10) 3. [FRED, Federal Government Current Expenditures: Interest Payments (A091RC1Q027SBEA), BEA](https://fred.stlouisfed.org/series/A091RC1Q027SBEA) 4. [FRED, Federal Government: National Defense Consumption Expenditures and Gross Investment (FDEFX), BEA](https://fred.stlouisfed.org/series/FDEFX) 5. [FRED, Federal Outlays: Interest (FYOINT), Office of Management and Budget and U.S. Treasury, fiscal year](https://fred.stlouisfed.org/series/FYOINT) 6. [FRED, Federal Debt: Total Public Debt (GFDEBTN), U.S. Treasury](https://fred.stlouisfed.org/series/GFDEBTN) 7. [FRED, Federal Government Current Receipts (FGRECPT), BEA](https://fred.stlouisfed.org/series/FGRECPT) 8. [FRED, Federal Funds Target Range, Upper Limit (DFEDTARU), Federal Reserve](https://fred.stlouisfed.org/series/DFEDTARU) Paid members get the full Weekly Signals, the weekly Leaders and Laggards and every chart behind each call. [Start with 7 days free](https://www.leadlagreport.com/#/portal/signup?utm%5Fsource=llr&utm%5Fmedium=daily&utm%5Fcampaign=9am). The Lead-Lag Report is provided by Lead-Lag Publishing, LLC. All opinions and views mentioned in this report constitute our judgments as of the date of writing and are subject to change at any time. 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