Reported 5 months ago
Investors are becoming increasingly worried about the rising U.S. debt burden, especially with the upcoming November election on the horizon. The flood of U.S. government debt issuance is expected to overshadow a potential bond rally, as concerns over large fiscal deficits persist. Despite bets on Federal Reserve interest rate cuts driving the bond market this year, analysts and investors anticipate fiscal worries to take the spotlight as the election nears. Some are already reallocating funds to mitigate potential losses from surging Treasury yields, while others fear destabilization of the Treasury market due to uncertainty over necessary debt levels for deficit spending. The Congressional Budget Office projects a substantial increase in federal debt by 2034, and traditional demand sources for U.S. government bonds are not keeping pace. Democrats and Republicans have pledged to address deficit spending, but market participants are beginning to prepare for potential repercussions, such as higher long-term yields.
Source: YAHOO