Joseph Brusuelas warns that global financial markets are finally acknowledging the sustainability of U.S. national debt.
Joseph Brusuelas, a Chief Economist at RSM, stated that global financial markets are now signaling that U.S. national debt is becoming a concern. While investors previously ignored spiraling debt and expanding deficits due to low borrowing costs, a recent global bond selloff sent yields to their highest levels in two decades. This shift indicates that markets are running out of patience with high public debt and the continued spending of governments since the COVID--19 pandemic. Brusuelas noted that economic populism from both sides of the aisle—characterized by spending on the left and tax cuts on the right—has contributed to the issue. Analysts at Capital Economics also noted that investors are now demanding greater compensation for fiscal and geopolitical uncertainty. Because governments show little indication of curbing deficits, the term premium is expected to remain elevated, making bond markets susceptible to renewed volatility in the coming quarters.