Treasuries are priced alongside term SOFR at one year [1][2]. The cost to insure U.S. debt is in line with where it's been for the last five years [3]. (And around where they were ten years ago.)
This has nothing to do with investors' perceptions of U.S. credit and everything to do with the financial rates environment.
> This has nothing to do with investors' perceptions of U.S. credit and everything to do with the financial rates environment
It absolutely is related to investors' perceptions of U.S. credit worthiness. The news is about the 13th of August 2026 auction.
Entities lending money to US want increasingly higher compensation, which is unsurprising considering that the US projected deficits are ballooning (an estimated 7.4% both in 2026 and 27). US has already blown past 1.8T in deficit in the first 6 months of 2026 alone. That's higher than the deficit for the entirety of 2025.
Finding money to absorb all this spending is not easy and lenders are spooked by inflation and borrowing levels.
> It absolutely is related to investors' perceptions of U.S. credit
Related to, not evidence of. I added a CDS reference which isolates the credit component.
> Entities lending money to US want increasingly higher compensation
Entities lending money in dollars want higher compensation. There is no evidence they demand a risk premium from the United States.
What we are seeing is an increased term premium. But that doesn't have to do with the U.S.'s perceived creditworthiness, it's a function of money supply and demand.
> Several factors have driven the rise in bond yields, including higher inflation expectations amid elevated energy prices following the Iran war and uncertainty surrounding a new Federal Reserve Chair. But the more fundamental concern is the US fiscal position: persistently high budget deficits have reached 6 percent of GDP, while government debt now exceeds the size of the US economy.
> In Fiscal Year 2026, which ends in September, the US Treasury is expected to issue around $2 trillion of securities on a net basis. Gross issuance, meanwhile, could reach a staggering $20 trillion according to the Securities Industry and Financial Markets Association. That gap reflects the sheer volume of debt that needs to be rolled over, much of it resulting from the Treasury’s decision under former Secretary Janet Yellen to favor shorter maturities when rates were lower and curves were upward sloping.
> US Treasury Secretary Scott Bessent has been attentive to the resulting borrowing costs and their impact on the budget deficit, which is why the Treasury has sought to limit pressure on the US bond market from foreign central banks that need dollars. During a recent joint FX market intervention with Japan, the Treasury sold euros for yen rather than dollars, avoiding transactions that would have required selling Treasuries. It has also asked the Fed to raise the limit on its Foreign and International Monetary Authorities repo facility, allowing the Bank of Japan and other foreign central banks to borrow short-term dollars against Treasuries rather than sell them in the open market, which could put further upward pressure on yields.
We can reasonably debate if investors should treat the U.S. as a riskier credit. But these auctions, CDS data and other funding rates for high-quality non-U.S. dollar-denominated credits (e.g. Saudi Arabia's dollar-denominated debt [2]) do not show what the article implies they do.
Forgive me if I defer to the bond market and treasury auction data. The data shows a path to a potential debt spiral and crisis based on yields demanded and debt outstanding. Current annual debt servicing expense is already ~$1T/year.
Congress sets the budgets (well, is supposed to, but yes there has been pretty excessive delegation to the executive) so you really want to say every Congress # + White House.
When you break it up that way, there have been several fiscally conservative congresses + good presidency combos, most notably under Clinton where they reformed welfare, increased taxes and managed to get a budget surplus one year. The formula seems to be slim Democratic Party majorities in Congress with a Democrat president.
So yes it’s rare but good governance + rising tides can make a difference.
> Blinder and Watson reported that budget deficits tended to be smaller under Democrats at 2.1% potential GDP versus 2.8% potential GDP for Republicans, a difference of about 0.7 of a percentage point. They wrote that higher budget deficits should theoretically have boosted the economy more for Republicans, and therefore cannot explain the greater GDP growth under Democrats.[3] Since 1981, federal budget deficits have increased under Republican presidents Ronald Reagan, both Bushes, and Trump, while deficits have declined under Democratic presidents Clinton and Obama. The federal government ran surpluses during Clinton's last four fiscal years, the first surpluses since 1969. The deficit was projected to decline sharply in Biden's first fiscal year.
If only it could get fucked in isolation like that country. It's basically Rome and the whole planet is its empire, whatever happens the shockwaves affect everyone on the planet.
Did the British Empire collapse during the Suez Crisis of 1956, when it was embarassingly unable to open a major shipping chokepoint via military force?
Did we know it had by 1957, or did that take a little longer to confirm the shape of the decline?
Didn't we rather embarrasingly withdraw from Afghanistan recently after two decades of trying to build a functioning government, only to have the Taliban take it back in a matter of days?
Kinda, yes. Osama Bin Laden's express goal was to bankrupt the U.S. by provoking it into a war it could not win. Three wars in the Middle East later, and $33T in additional government debt, and hear we are.
Entire global society collapse is probably less than 25 years away due to climate change spiraling out of control. Relative to that the US national debt hardly even matters.
Treasuries are priced alongside term SOFR at one year [1][2]. The cost to insure U.S. debt is in line with where it's been for the last five years [3]. (And around where they were ten years ago.)
This has nothing to do with investors' perceptions of U.S. credit and everything to do with the financial rates environment.
[1] https://home.treasury.gov/resource-center/data-chart-center/...
[2] https://www.global-rates.com/en/interest-rates/cme-term-sofr...
[3] https://en.macromicro.me/charts/68239/us-5year-cds
> This has nothing to do with investors' perceptions of U.S. credit and everything to do with the financial rates environment
It absolutely is related to investors' perceptions of U.S. credit worthiness. The news is about the 13th of August 2026 auction.
Entities lending money to US want increasingly higher compensation, which is unsurprising considering that the US projected deficits are ballooning (an estimated 7.4% both in 2026 and 27). US has already blown past 1.8T in deficit in the first 6 months of 2026 alone. That's higher than the deficit for the entirety of 2025.
Finding money to absorb all this spending is not easy and lenders are spooked by inflation and borrowing levels.
> It absolutely is related to investors' perceptions of U.S. credit
Related to, not evidence of. I added a CDS reference which isolates the credit component.
> Entities lending money to US want increasingly higher compensation
Entities lending money in dollars want higher compensation. There is no evidence they demand a risk premium from the United States.
What we are seeing is an increased term premium. But that doesn't have to do with the U.S.'s perceived creditworthiness, it's a function of money supply and demand.
It’s absolutely a risk premium. The market is slowly pricing in no appetite to reduce the US deficit.
https://www.atlanticcouncil.org/blogs/econographics/are-risi...
> Several factors have driven the rise in bond yields, including higher inflation expectations amid elevated energy prices following the Iran war and uncertainty surrounding a new Federal Reserve Chair. But the more fundamental concern is the US fiscal position: persistently high budget deficits have reached 6 percent of GDP, while government debt now exceeds the size of the US economy.
> In Fiscal Year 2026, which ends in September, the US Treasury is expected to issue around $2 trillion of securities on a net basis. Gross issuance, meanwhile, could reach a staggering $20 trillion according to the Securities Industry and Financial Markets Association. That gap reflects the sheer volume of debt that needs to be rolled over, much of it resulting from the Treasury’s decision under former Secretary Janet Yellen to favor shorter maturities when rates were lower and curves were upward sloping.
> US Treasury Secretary Scott Bessent has been attentive to the resulting borrowing costs and their impact on the budget deficit, which is why the Treasury has sought to limit pressure on the US bond market from foreign central banks that need dollars. During a recent joint FX market intervention with Japan, the Treasury sold euros for yen rather than dollars, avoiding transactions that would have required selling Treasuries. It has also asked the Fed to raise the limit on its Foreign and International Monetary Authorities repo facility, allowing the Bank of Japan and other foreign central banks to borrow short-term dollars against Treasuries rather than sell them in the open market, which could put further upward pressure on yields.
> It’s absolutely a risk premium
It's objectively not–that's what CDS measure.
> higher inflation expectations
Not reflected in the data [1].
We can reasonably debate if investors should treat the U.S. as a riskier credit. But these auctions, CDS data and other funding rates for high-quality non-U.S. dollar-denominated credits (e.g. Saudi Arabia's dollar-denominated debt [2]) do not show what the article implies they do.
[1] https://fred.stlouisfed.org/series/T10YIE
[2] https://live.deutsche-boerse.com/bond/xs2747599509-saudi-ara...
Forgive me if I defer to the bond market and treasury auction data. The data shows a path to a potential debt spiral and crisis based on yields demanded and debt outstanding. Current annual debt servicing expense is already ~$1T/year.
https://www.pgpf.org/programs-and-projects/fiscal-policy/mon...
> Forgive me if I defer to the bond market and treasury auction data
TIPS are Treasuries. The breakeven-inflation rate is calculated entirely from Treasuries.
Do you know how bond auctions work? It's based on a price-discovery mechanism.
The treasury announces it wants to sell $ 25B of 30Y bonds.
Then investors submit offers saying in effect how much yield they demand to buy them.
Then the treasury fills bids from the lowest yield upwards in tranches.
> Do you know how bond auctions work?
Yes. What do you think I don't understand?
Do you understand the difference between credit and rates?
I don't think you understand that at bond auctions buyers submit bids essentially setting at which rate they will buy the bonds.
Then the treasury fills these orders from the lowest to highest bid.
So all of your post make no sense. US paying the highest rates in 25 years means the buyers are expecting higher premiums.
And they ask them because they are worried about inflation and elevated borrowing levels.
> Then the treasury fills these orders from the lowest to highest bid
No, it does not. Treasury goes down the list until it has "filled" the auction and then everyone gets the marginal rate.
> US paying the highest rates in 25 years means the buyers are expecting higher premiums
Again, do you understand the difference between credit and rates?
I dunno, guys, maybe hiring a guy who bankrupted 4 casinos wasn't the right way to go after all
Hey, he's a businessman! He extracts value for shareholders!
I fully support blaming Orange Foolius for, well, everything. But hasn't every administration since Reagan contributed to this?
Congress sets the budgets (well, is supposed to, but yes there has been pretty excessive delegation to the executive) so you really want to say every Congress # + White House.
When you break it up that way, there have been several fiscally conservative congresses + good presidency combos, most notably under Clinton where they reformed welfare, increased taxes and managed to get a budget surplus one year. The formula seems to be slim Democratic Party majorities in Congress with a Democrat president.
So yes it’s rare but good governance + rising tides can make a difference.
Including Reagan.
And so much of it has to do with the influence of The Heritage Foundation.
Not exactly.
> Blinder and Watson reported that budget deficits tended to be smaller under Democrats at 2.1% potential GDP versus 2.8% potential GDP for Republicans, a difference of about 0.7 of a percentage point. They wrote that higher budget deficits should theoretically have boosted the economy more for Republicans, and therefore cannot explain the greater GDP growth under Democrats.[3] Since 1981, federal budget deficits have increased under Republican presidents Ronald Reagan, both Bushes, and Trump, while deficits have declined under Democratic presidents Clinton and Obama. The federal government ran surpluses during Clinton's last four fiscal years, the first surpluses since 1969. The deficit was projected to decline sharply in Biden's first fiscal year.
https://en.wikipedia.org/wiki/U.S._economic_performance_by_p...
> Orange Foolius
As a kid in the 80s/90s who spent a non-zero amount of time in a mall, I just wanted to highlight how great this name is.
Those things were delicious.
Just the Republcian ones.
Clinton changed a 300b deficit into a 100b surplus. Obama reduced it from 1.4t to 500b.
Biden also slashed it but that’s a little unfair due to covid.
Yes
Except Clinton.
Didn't the rules for how CEOs are paid change under Clinton?
Another wave of inflation is coming in the next 6 months or what?
> Another wave of inflation is coming in the next 6 months or what?
No, at least according to Treasury buyers [1].
[1] https://fred.stlouisfed.org/series/T10YIE
Looks right about like when we entered 2008, if you zoom out.
Great economy you got there. Couldn't bribe Japan to not sell off their US Bonds and now they need to attract bag holders by raising rates.
The US is going the way of Zaire.
If only it could get fucked in isolation like that country. It's basically Rome and the whole planet is its empire, whatever happens the shockwaves affect everyone on the planet.
Hear that? It’s the sound of an empire collapsing.
Did it collapse in 2001?
Did the British Empire collapse during the Suez Crisis of 1956, when it was embarassingly unable to open a major shipping chokepoint via military force?
Did we know it had by 1957, or did that take a little longer to confirm the shape of the decline?
India was already independent by then. That seems like it would have been a pretty strong signal.
Didn't we rather embarrasingly withdraw from Afghanistan recently after two decades of trying to build a functioning government, only to have the Taliban take it back in a matter of days?
Kinda, yes. Osama Bin Laden's express goal was to bankrupt the U.S. by provoking it into a war it could not win. Three wars in the Middle East later, and $33T in additional government debt, and hear we are.
Entire global society collapse is probably less than 25 years away due to climate change spiraling out of control. Relative to that the US national debt hardly even matters.
One of these days, one of you climate doomsdayers will be right. So far, you've all been wrong, going all the way back to the 60s.