By the time you read this, there’s a fair chance that the US will be bemoaning another bleak economic milestone: the national debt will break through the $US40 trillion ($56 trillion) mark.
It’s a stunning figure, but as Bank of America strategist Michael Hartnett points out, the clock is ticking. The US national debt is on track to hit $US50 trillion by 2029, and the US has spent about $US1.4 trillion on interest payments alone in the past 12 months.
Is this milestone playing on the mind of the so-called bond vigilantes, the name given to the shadowy (some would say imaginary) cabal of bond investors who suddenly appear at times of financial market stress, pushing bond yields sharply higher to instil some much-needed discipline on profligate governments?
Obviously, we can’t simply ring up Bond Vigilante HQ and get an answer. But what is clear is that bond investors appear to be getting increasingly nervous about the state of long-term government debt around the world.
In the US, the 30-year treasury yield has surged to 5.31 per cent, the highest since 2007. In France, 30-year yields have hit the highest level since 2008 as traders (and politicians) brace for a fight over the 2027 budget before next year’s presidential election.
Source:https://www.afr.com/chanticleer/bonds-are-flashing-a-warning-sign-again-it-s-time-to-listen-20260819-p60pjl