Former Treasury Secretary Henry Paulson warned policymakers to prepare a short-term emergency plan if demand for U.S. Treasurys breaks down, saying fallout could be "vicious." Rising U.S. debt (over $39 trillion) and higher yields could create a feedback loop that raises borrowing costs and strains markets. Because Treasurys underpin global finance, disruption could cascade into bonds, mortgages and equities, and crypto is exposed since large stablecoin issuers such as Tether hold significant Treasury assets. Treasury officials have started liquidity measures, including a $15 billion buyback of less liquid 2026–2028 securities, to improve market functioning.

Paulson warned of a potentially "vicious" fallout if Treasury demand weakens; U.S. debt is above $39 trillion and higher yields could create a feedback loop raising borrowing costs; Treasurys underlie global markets and disruption could cascade to other assets; major stablecoin issuers (e.g., Tether) hold significant Treasury assets; Treasury initiated a $15 billion buyback of less-liquid 2026–2028 securities to restore market functioning.