Moody’s chief economist Mark Zandi is observing early signs of discomfort in the Treasury market, with the U.S. national debt now exceeding $40 trillion and its debt-to-GDP ratio standing at 126%. The fiscal year ending in October confirmed a $2 trillion deficit, more than half of which was attributable to interest payments alone. The 10-year Treasury yield has risen approximately one percentage point this year, among the biggest increases of any major economy. Zandi warns that a vicious cycle threatens to take hold, with higher rates adding to interest payments and the debt load, which in turn pushes rates up even more. While long-term sovereign yields have risen sharply across G7 nations, Zandi emphasizes that the U.S. remains by far the most critical case, as Treasuries serve as the global benchmark.
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