Rising U.S. government debt could impact investor interest in long-dated Treasuries and the dollar.

From Yahoo Finance: 2025-06-30 12:34:00

BlackRock warns that surging U.S. government debt may reduce investor interest in long-dated Treasuries and the dollar, prompting a shift to non-U.S. opportunities. Trump’s tariffs have caused market uncertainty, potentially impacting the dollar’s reserve currency status. Rising government debt poses a significant risk to the U.S.’ financial market position.

Congress is deliberating a tax and spending bill that could add up to $5 trillion to the $36 trillion U.S. federal debt. BlackRock predicts that higher government debt may disconnect long-dated Treasury yields from U.S. monetary policy, leading to increased supply and decreased demand from the Fed and foreign central banks.

BlackRock suggests diversifying outside the U.S. government bond market and increasing exposure to short-dated Treasuries to benefit from interest rate cuts. Despite proposed spending cuts, deficits continue to rise, with interest payments consuming more government spending. Foreign investors are pulling back, raising concerns about the government’s ability to absorb increasing debt.



Read more at Yahoo Finance: Rising government debt poses greatest risk to US market standing, says BlackRock