Celebrating Bond Returns While the House Burns

On December 5, the Treasury Department’s official X account shared a chart declaring that U.S. Treasuries are “having their best year since 2020” in 2025, that returns are at their highest level in recent years. Scott Bessent, Secretary of the Department of Treasury, reposted the chart with an image of Franklin the Turtle holding a stack of cash and wearing a MAGA hat, presumably to message that “money is being made” thanks to the economic policies of the Trump administration.

The Trump administration’s victory lap has the economic realities of 2025 America backwards. As Tim Chapman from Advancing American Freedom noted, “Apparently the Treasury Department social media team needs a crash course in Economics 101.” 

The latest consumer price index report showed that prices in September 2025 were 3 percent higher than a year earlier. Even so, the Federal Reserve has already cut its benchmark federal funds rate twice this fall to stimulate the economy and markets are projecting another cut at the coming Federal Open Market Committee meeting with high confidence—despite inflation remaining roughly a full percentage point above the Fed’s long-run target. A weakening labor market that looksincreasingly bleak is largely the reason why. Moreover, trade-policy bedlam and growing concern over the durability of AI-driven investment seem likely to weigh on GDP growth, with forecasts falling to 1.7 percent in 2026 from an already unimpressive 2.0 percent in 2025.

All three macroeconomic indicators paint a clear picture: As David Bahnsen put it, “The economy is not collapsing. The economy is not strong.” Add to this President Trump’s 40.5 percent approval rating on his handling of the economy and a dipping consumer sentiment since the beginning of this year, and few could find much reason for optimism in the current economic outlook.

The U.S. Treasury Department is one of those few.

The agency’s touting of the highest returns on 10-year U.S. Treasuries since President Trump’s first term were meant to inspire confidence in U.S. economic strength during his second term in office. To those who understand economics, however, high returns inspire nothing of the sort.

In other words, what the U.S. Treasury framed as a victory—strong bond returns—are, in fact, often the byproduct of inflation, heavier borrowing, and investors’ flight to safety. U.S. Treasuries are the world’s primary “safe-haven” asset, one that investors rush toward when uncertainty rises. When they do, demand drives up bond prices and pushes market yields lower. Investors who previously locked in higher coupon rates then enjoy strong returns. High bond-market returns, therefore, are not—and have never been—a reason for boastful tweets or optimism about economic strength. More often, they signal the opposite, as history repeatedly shows.

Treasury did not bother to examine the past few so-called “best” years for bond market investors. For example, 2020 (the worst year of the COVID-19 shock) is the most recent strong year for the bond market. The Great Recession produced even higher bond returns, as did 2002—the year following the dot-com collapse. Not coincidentally, the highest bond returns on record occurred in 1982, a recession year that followed a period of rampant inflation.

Moreover, the U.S. Treasury specifically has the least reason to cheer for elevated bond returns. Celebrating investors’ gains on government debt is, to put it mildly, irresponsible—if not outright ludicrous—given that taxpayers are ultimately the ones who underwrite those bonds.

Not only did Treasury yields reach near multi-decade highs at the start of the year, they have also remained above 4 percent on average. Meanwhile, the federal budget deficit totaled roughly $1.8 trillion in fiscal year 2025—a portion of which will be financed through issuance of 10-year Treasury notes. With almost $38.4 trillion of outstanding liabilities—essentially the taxpayers’ burden—the U.S. government has accumulated more high-yield debt.

Having paid roughly $1 trillion in interest expenses in 2025 with the taxpayers’ money, the U.S. Treasury’s effort to spin high bond returns as a triumph, despite current economic conditions, is akin to asking a homeowner to celebrate a rising insurance payout while the house burns.