The enormous mountain of debt hanging over the economy has overshadowed the AI boom as the center of attention on Wall Street. The global bond selloff pushed yields to their highest level in two decades, with notable increases across the United States, the United Kingdom, France, Germany, and Japan. The U.S. Treasury announced buybacks of long-dated bonds to stem the yield rise, but investors remain skeptical about the effectiveness of this maneuver. Capital Economics analysts believe bond investors are demanding greater compensation for fiscal, geopolitical, and policy uncertainty, which justifies a persistently elevated term premium. RSM Chief Economist Joseph Brusuelas stated: ‘When does debt become unsustainable? When the global financial markets say it is.’
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