Steve Bannon Warns a Failed Treasury Auction Is the 'Canary' as Yields Climb

Steve Bannon told his War Room audience on Thursday that the first sign of a U.S. debt crisis will not be unrest in the streets. In his view, it will be a Treasury auction that fails to find enough buyers.

"The canary in the mine shaft here is a failed treasury auction where the treasury goes out," Bannon said. He spoke as long-term borrowing costs sat near their highest levels in more than two decades, with the federal government's interest bill now above $1 trillion a year.

The warning is about the Trump administration's fiscal position, but it is not a break with the president. Bannon said a reporter recently asked Donald Trump whether he was worried about an upcoming bond auction and its size. Trump, Bannon said, "didn't want to answer," adding: "He pivoted away from it, which is smart."

Steve Bannon Points to France and the 10-Year Treasury Yield

Bannon opened the segment by holding up France, where the government is struggling to close a budget gap, as a preview. "France portends what's going to happen in America," he said.

He argued that the dollar's role as the world's main reserve currency gives Washington room that Paris does not have, but that the room is running out. "The way you're seeing it is not people running around the streets. That comes later," Bannon said.

"Now they've got the 30s at highs we haven't seen in 25 years. The 10-year, which governs your life. The 10-year treasury go over 5.3%. It's starting to get jiggy," he said.

The record mostly backs him up. On Wednesday, the 10-year yield peaked at 5.35 percent and the 30-year bond peaked at 5.73 percent, a 24-year high, UPI reported. Mortgage rates have climbed with them, as PolitiKool's mortgage-rate tracker shows.

What the Birch Gold Guest Said About a Failed Auction

Bannon's guest was Philip Patrick of Birch Gold Group. Birch Gold sponsors War Room and sells gold, and the segment closed with Patrick steering viewers to the company's website. "When it does, I think gold will as well," he said.

Patrick agreed the debt was the country's biggest problem, but he played down how close a failed auction is. "I think we're a ways out from a failed treasury auction," he said. "Right now, what we have is a math problem, right? Borrowing rates are going up. They absolutely are, but they're not historically high."

Early in the segment he said the 10-year rate had "gone above 5.3%" and later put it at 5.8 percent. The first figure matches the market. The 10-year's peak on Wednesday was 5.35 percent.

This week's auctions also show demand holding up so far. The Treasury sold $39 billion of 10-year notes on Wednesday at 5.3 percent, the highest auction yield since 2000. Indirect bidders, a group that includes foreign central banks, took 80.3 percent of the sale, compared with a 10-auction average of 72.4 percent, according to UPI.

Checking the $40 Trillion Debt and $10 Trillion Refinancing Claims

Patrick said, "We've amassed $40 trillion of debt and a lot of that now is in the short term," and that Treasury Secretary Scott Bessent will need to roll over about $10 trillion within a year.

Both figures hold up. Total public debt outstanding stands above $40 trillion, according to Treasury's Debt to the Penny data, a figure PolitiKool follows on its national debt tracker. A Government Accountability Office report released in April found Treasury must refinance $9.7 trillion of maturing securities in fiscal year 2026. It also found that 33 percent of outstanding debt was set to mature within 12 months, up from 24 percent in 2014.

Patrick also said debt service is "now the second biggest expense." Interest payments reached $1.02 trillion in fiscal 2026 through August, behind only Social Security, according to the Peter G. Peterson Foundation's interest tracker.

What Happens Next

The warning lands as voters already give Trump poor marks on the economy. Just 29.7 percent approve of his handling of it, according to PolitiKool's polling average. Megyn Kelly, host of The Megyn Kelly Show, also said this week that voters who blame Trump over prices are "right, in a way."

Bannon told viewers to keep watching what he called "these formerly obscure treasury auctions," both how large they are and what rates they clear at. The next big test comes as Treasury refinances its short-term debt at rates far above the ones it was first sold at.