The United States government bond market emits a clear message to Washington: Investors are no longer willing to finance the expanding public debt without significant return, according to the
The era of low yields, which made debt funding almost “inexpensive”, seems to have ended.
Higher yields, increasing risk
At a recent auction of 20 -year US government bonds, the weaker demand was recorded since February, resulting in the rise of yields to levels that had to occur since the 2008 financial crisis. The market now requires a higher reward for the increasing debt.
Fiscal pressures and credit rating
The US from the house comes to raise concern about the long -term viability of US debt. The planned tax reform, known as “Big, Beautiful Bill”, is estimated to burden the federal budget with an additional 4 trillion. Dollars in the next decade, at a time when double deficits – public and commercial – are already at historically high levels.
Turbulence in markets and breaks up in the real economy
Developments in the bond market already have an impact on stock markets, with increased volatility and sliding of basic indicators. Loss of confidence in the ability of the federal government to control debt and maintain fiscal stability creates an environment of increased risk for capital markets and the real economy.
The situation, according to analysts, reminds us of the United Kingdom’s crisis in the fall of 2022, when the sharp increase in bond yields combined with controversial fiscal choices has led to the bank’s turmoil and forced intervention.
The consequences for fiscal stability, investment and growth
The global trend of over -supply savings that maintained borrowing rates at historically low levels seems to have been reversed. Governments are now confronted with a new reality: markets require increased risk performance, while their tolerance to expanding deficits and explosive debt is limited.
This development may have long -term consequences for fiscal stability, investment dynamics and global economic growth.
The bond market message is clear: Washington can no longer consider the low borrowing costs. Investors require responsibility, transparency and discipline in fiscal policy. Maintaining market confidence is now a critical prerequisite for the economic stability of not only the US but also in the global economy.
