FORMER PIMCO BOSS SAYS THE BOND SELLOFF IS “NO ORDINARY” ONE. NET INTEREST ON THE DEBT IS NOW $963 BILLION. SECOND ONLY TO SOCIAL SECURITY.

Mohamed El-Erian ran PIMCO. It is the biggest bond fund in the world. He wrote in the New York Times on August 20 that the current bond selloff is “no ordinary bond-market sell-off.” He called it a “structural economic shift more enduring and more globally consequential than most previous episodes of market volatility.” When El-Erian names something structural, the desks pay attention.

The 30-year Treasury yield hit 5.27 percent this week. That is a level not seen since 2007. El-Erian says the driver is not runaway inflation. It is the real yield — the extra pay investors demand for holding US debt in a more volatile world. The world got more volatile. The investors want more pay.

The math is starting to eat the country. The Congressional Budget Office says net interest on public debt for fiscal 2026 is now $963 billion. That is second only to Social Security in yearly government spending. Roughly 20 percent of federal revenue goes to servicing the debt. That is less money available for defense. Less money available for health care. And less money available for anything else the government does.

There are two pressures making it worse. Big tech companies building AI data centers sold about $500 billion in bonds this year. Goldman Sachs estimates another $300 billion before year end. Japan’s yen fell to lows not seen since the 1990s. The US Treasury had to buy yen with euros to prevent Japan from dumping US bonds. The world is running out of buyers for American debt at prices the government wants to pay. Something has to give.