”US fiscal concerns have surged on the back of the Trump Administration’s “One Big Beautiful Bill Act”, which has helped fuel a sharp rise in long-dated bond yields. But such concerns are nothing new, so is this time really different? We ask three economy-watchers long concerned about the US fiscal trajectory: Bridgewater’s Ray Dalio, Harvard’s Kenneth Rogoff, and historian Sir Niall Ferguson. All three believe the answer is “yes” and make their case for why they think a crisis lies ahead and what it might look like. GS’ Alec Phillips is also worried over the longer term but notes that tariff revenues should offset the deficit impacts of the fiscal package over the next decade. We also look at other places that have long elicited fiscal concern—the European periphery, Asian debt giants Japan and China, and EMs—and see fewer—but not no—reasons to worry. Finally, we assess the market impacts of these shifting fiscal dynamics, concluding that US long-end rates will likely remain high, and the Dollar should weaken further.”
Morten W. Langer
