Markets React Sharply to Fiscal Uncertainty & Rising US Debt
The 30-year Treasury yield jumped to 5.096%, the highest since 2023, while the S&P 500 fell 1.6%. Nearly all sectors declined, with financials, healthcare, and real estate hit hardest. The downgrade from Moody’s and a lack of appetite for long-duration bonds are adding pressure, while Big Tech also slid amid news of OpenAI’s $6.4B acquisition of Jony Ive’s hardware startup. Markets are signaling concern over US fiscal credibility.
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The Quiet Retreat from US Treasuries — A Signal, Not Just a Strategy
China is no longer treating US Treasuries as untouchable. Since 2022, it has cut its official holdings by over 27%—not in retaliation, but as part of a quiet strategic pivot. The focus is shifting toward agency bonds, gold, and non-US assets to reduce exposure to American financial dominance. Japan hasn’t sold—but it has spoken. Its finance minister recently called the country’s $1.13 trillion in Treasuries a “card” in US trade negotiations, signaling a willingness to rethink even long-standing positions. The message from both is clear: global confidence in US debt is not vanishing—but it is no longer unconditional. As the US pursues more aggressive trade and economic policies, investors worldwide are starting to ask: what happens when the world’s most trusted asset becomes a geopolitical risk?
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