Treasury Yields Hit 20-Year High as Schiff Warns of Interest Bill 'Eating' US Economy

Peter Schiff is sounding the alarm on the recent spike in Treasury yields. The five-year note auction cleared at 5.03% on its auction date, marking a 20-year high. The 30-year bond hit 5.446%, a 22-year high, and the 10-year tagged 5.168%. Schiff believes this is just the beginning of the curve's upward trajectory.

He predicts that the 10-year to 30-year spread will widen from its current level of under 30 basis points back towards 50 or more. To express his view, he would short the long bond against the 10-year. Schiff emphasizes that this is not just a matter of interest rates; it's about the debt math.

The $40 trillion national debt now incurs over $2 trillion in annual interest payments, which exceeds 35% of tax revenue and dwarfs Social Security spending. The debt continues to grow at a rate of over $3 trillion per year, making this issue increasingly unsustainable.

Schiff also weighed in on the recent controversy surrounding Federal Reserve Chair Jerome Powell's decision-making process. He believes that if Powell cleared his vote with President Donald Trump before announcing the interest rate hike, then Trump effectively gave him permission to raise rates. Schiff views this as a severe conflict of interest and calls for Powell to be asked about it at the next press conference.