Risk of a Sovereign Bond Crisis

Will bonds blow up?
https://www.economist.com/leaders/2026/10/08/will-bonds-blow-up
A government-debt crisis is looming.
 
Turbulent bond markets threaten some countries more than others
https://www.economist.com/briefing/2026/10/08/turbulent-bond-markets-threaten-some-countries-more-than-others
For those where interest rates outstrip economic growth, trouble looms.

France Is Veering Toward a Potential Debt Crisis, a Warning to the World
https://www.nytimes.com/2026/10/08/business/france-bond-yields.html
French bond investors are demanding sharply higher interest rates, a cautionary development for other high-debt countries.

 
France’s Economy Is Trapped in a Negative Feedback Loop
https://www.wsj.com/economy/global/frances-economy-is-trapped-in-a-negative-feedback-loop-509598a9
Uncertainty about whether the country can fix its finances has itself started to weigh on economic activity.
 
U.S. Budget Deficit Jumps to Nearly $2 Trillion
https://www.wsj.com/politics/policy/u-s-deficit-clocks-in-just-under-2-trillion-7e8e9eb3
U.S. finances are stuck in a rut that alarms policymakers, but hasn’t moved them to change course. 

Is France Headed Towards a Fiscal Crisis?

France’s Appetite for ‘Magic Money’ Has Turned into a Debt Bomb
https://www.wsj.com/world/europe/france-debt-bonds-spending-c7981557
After years of overspending, the country has emerged as one of Europe’s weakest links. Investors are bracing for things to get worse.

French bond contagion fears are rattling the euro
https://www.reuters.com/world/europe/french-bond-contagion-fears-are-rattling-euro-2026-10-05/

 
Related:
https://www.ft.com/content/9b252b46-a87c-45e7-a09a-45a39ce077b8 

Will the US Government Try to Inflate Away its Debt Burden?

Trump just soft-launched higher inflation as the new solution for rebalancing the $40 trillion U.S. national debt
https://finance.yahoo.com/economy/policy/articles/trump-just-soft-launched-higher-111017831.html

What bond market reveals about Congress and the debt
https://finance.yahoo.com/economy/policy/articles/bond-market-reveals-congress-national-094500766.html

We need a US debt conversation — will the Republicans have one?
https://www.ft.com/content/a52c092f-b93b-472b-8e18-83910c3a6260
Borrowing heavily to finance tax cuts for the wealthy leaves us less prepared for emergencies when they come.

 
Related:
Investors beware: Fiscal dominance and financial repression ahead by Vivekanand Jayakumar, The Hill - 07/13/25
https://thehill.com/opinion/finance/5397963-fed-keeping-rates-low-trump-administration/ 

Government Debt and Bond Yields

High Government Debt Is Adding Fuel to the Global Bond-Market Selloff
https://www.wsj.com/finance/investing/high-government-debt-is-adding-fuel-to-the-global-bond-market-selloff-a93fa0fe
Oil prices are driving rates higher, but indebtedness is a key risk factor. 

Rejuvenating China's Economy

China is giving its economy a big shot in the arm
https://www.economist.com/briefing/2026/10/01/china-is-giving-its-economy-a-big-shot-in-the-arm
A massive infrastructure scheme may give the country a sorely needed boost—and help rebalance the world economy. 

Globalization and Capital Taxation

Bachas, Pierre, Matthew Fisher-Post, Anders Jensen, and Gabriel Zucman. 2026. "Globalization, Capital Taxation, and Development: Evidence from a Macrohistorical Database." American Economic Journal: Applied Economics, 18 (4): 509–49.
https://www.aeaweb.org/articles/pdf/doi/10.1257/app.20240746
This paper builds and analyzes a new global macrohistorical database of effective tax rates on capital and labor in 154 countries. We establish a new stylized fact: While effective capital tax rates fell in developed countries between 1965 and 2018, they rose in developing countries after 1990. Multiple country-, sector-, and firm-level research designs suggest that trade openness contributed to this rise by increasing the share of output produced in corporations and larger firms, where effective capital taxation is higher. In contrast to a common view, globalization appears in many countries to have supported governments' ability to tax capital. 

The Consequences of Bad Economic Policies

The Moves That Backfired on Trump and Drove Interest Rates and Inflation Higher
https://www.wsj.com/economy/trump-economy-inflation-jobs-724e4da8
The president’s own agenda has helped undermine promises to fix the economy and get the deficit under control.
 
Trump’s Tariffs Push Canadian Companies to Look Past American Links
https://www.nytimes.com/2026/09/28/business/trump-tariffs-canada-diversify.html
Shaken by tariffs and threats from the Trump administration, Canadian businesses are seeking markets and suppliers beyond the U.S. 

Time to Buy Bonds?

A Perfect Storm Is Raging in the Bond Market
https://www.wsj.com/finance/investing/a-perfect-storm-is-raging-in-the-bond-market-43d9b44b
The benchmark Treasury yield jumped above 5.1%, posting its biggest one-day rise in more than a year.
 
It’s a Good Time to Buy Bonds
https://www.wsj.com/opinion/its-a-good-time-to-buy-bonds-94e1c93e 

The Problem Is Where Interest Rates May Go, Not Where They Are Now
https://www.nytimes.com/2026/09/25/business/interest-rates-economy-markets-inflation-mortgages.html
History shows that the markets and the economy flourished when rates were even higher than today’s. But, our columnist notes, those times didn’t last.

Treasury versus the Bond Market

Bond Market Rebuffs Treasury’s $6 Billion Plan to Reduce Borrowing Costs
https://www.nytimes.com/2026/09/09/business/economy/treasury-repurchase-bessent.html
 
Related:
https://www.axios.com/2026/09/10/bessent-bonds-buyback-treasury
https://www.theguardian.com/business/2026/sep/10/bond-market-higher-costs 

Global Bond Sell-Off

There Are Four Forces Pressuring Bonds: War Is No. 1
https://www.wsj.com/finance/investing/there-are-four-forces-pressuring-bonds-war-is-no-1-68d3ace9
Fiscal worries, a new Federal Reserve chairman and even the flood of AI bonds are helping drive the recent climb in yields.
 
The Bond Market Issues World Leaders a Failing Grade
https://www.wsj.com/economy/the-bond-market-issues-world-leaders-a-failing-grade-621cf4dc
Nothing in this week’s G-20 suggested an end to the deficits, inflation and geopolitical disruptions that are roiling investors.

America has a whopping debt. But Europe has the whopping debt problem
https://www.economist.com/europe/2026/09/03/america-has-a-whopping-debt-but-europe-has-the-whopping-debt-problem
The French-size problem at the heart of the EU.

Borrowing Isn’t the Bond Market’s Only Concern—Growth Is Too
https://www.wsj.com/finance/investing/borrowing-isnt-the-bond-markets-only-concerngrowth-is-too-91596036
Many governments look more prudent than the U.S. right now, but aging workforces and anemic growth mean debts look scary.

Global Bond Sell-Off Puts Investors on Edge
https://www.nytimes.com/2026/09/01/business/bond-yields-debt.html
Government borrowing costs are hitting multi-decade highs around the world, reflecting anxiety about debt levels, deficits and inflation.  

Bond Yields Around the World Soar in Challenge to Government Borrowing
https://www.wsj.com/finance/investing/bond-yields-around-the-world-soar-in-challenge-to-government-borrowing-c519c53f
The runup in interest rates has profound consequences for the global economy, heaping pressure on everyone from home buyers to governments.
 
How to understand the current puzzle in bonds and equities
https://www.ft.com/content/b189d31a-5e56-471e-91d1-c319aa68f174

Bond Market Chaos

Think Treasurys Are Having a Rough Summer? It’s Even Uglier Abroad
https://www.wsj.com/economy/global/think-treasurys-are-having-a-rough-summer-its-even-uglier-abroad-7224cf70
Countries with large debt burdens—France, Italy, the U.K., Japan—have come under the heaviest pressure in recent months.
 
The Bond Market Chaos Is Coming for Us All
https://www.nytimes.com/2026/08/28/opinion/ezra-klein-podcast-robin-wigglesworth.html
 
Related:
https://www.nytimes.com/2026/08/27/opinion/bessent-warsh-treasury-fed-bonds-trump.html 

Portfolio Allocation: Stocks versus Bonds

Investing in Bonds? Be Careful.
https://www.nytimes.com/2026/08/21/business/investing-bond-market-stocks-funds.html
High-quality bonds are still safer than stocks, but they have been swinging in value, so move cautiously, our columnist says.

Why bond markets are unnerving rich-world politicians
https://www.economist.com/finance-and-economics/2026/08/19/why-bond-markets-are-unnerving-rich-world-politicians

 
How the A.I. Borrowing Binge Helps Drive Up Government Bond Yields
https://www.nytimes.com/2026/08/20/business/bond-yields-tech-ai-debt.html
Analysts said the recent rise in Treasury yields partly reflected investor expectations that A.I.-driven growth could keep interest rates elevated. 
 
It Won't Take Much to Burst the Stock Market Bubble
https://www.fa-mag.com/news/it-won-t-take-much-to-burst-the-stock-market-bubble-88174.html 

Stock indices no longer reflect equity reality
https://www.economist.com/finance-and-economics/2026/08/18/stock-indices-no-longer-reflect-equity-reality

US Public Debt and the Treasury Market

U.S. Debt Just Topped $40 Trillion: How We Got Here
https://www.wsj.com/economy/u-s-debt-just-topped-40-trillion-how-we-got-here-c1c6c9d2
The U.S. has reached a new borrowing milestone in its struggle to get hold of its finances.
 
Why Scott Bessent Is Playing with the Treasury Market
https://www.wsj.com/finance/investing/why-scott-bessent-is-playing-with-the-treasury-market-828256d4
The simple explanation for all this is that the world is going into a new era of capital need, for data centers, the military and reshoring. 

The Treasury Market’s Coveted Status as a Safe Haven Is Fading
https://www.wsj.com/finance/investing/the-treasury-markets-coveted-status-as-a-safe-haven-is-fading-c68fed93
Two new studies find signs investors aren’t as willing to accept low yields because of Treasurys’ safety.

Related:
https://www.nytimes.com/2026/08/19/business/economy/us-debt-40-trillion.html
https://www.nytimes.com/2026/08/19/business/treasury-bonds-yields-economy.html

Era of Higher Interest Rates

Investors Predict a New Era of Higher Yields in Bond Market
https://www.wsj.com/finance/investing/bonds-are-getting-hammered-and-wall-street-says-the-rout-wont-end-anytime-soon-895e0ad8
The rout has driven up borrowing costs for governments, businesses and families across the developed world. 

Bond Sell-Off Sends Borrowing Costs to Highest Level Since 2007
https://www.nytimes.com/2026/08/18/business/oil-prices-bonds.html

Related:

Central Banks Are Stuck in a Rinse-and-Repeat Cycle of Crises
https://www.wsj.com/economy/central-banking/central-banks-are-stuck-in-a-rinse-and-repeat-cycle-of-crises-47da47e9
By becoming market makers of last resort, policymakers are pumping up leverage and risk. 

Treasury's Yen Intervention

The Real Reason Behind Trump’s Yen Intervention
https://www.nytimes.com/2026/08/06/opinion/treasury-yen-trump-currency-economy.html

Why Bessent Is Leaning on the Fed to Help Prop Up Japan’s Currency
https://www.wsj.com/economy/central-banking/why-bessent-is-leaning-on-the-fed-to-help-prop-up-japans-currency-85794909
The Treasury secretary wants the central bank to help by raising its $60 billion borrowing limit on an obscure lending program.
 
Scott Bessent’s Yen Trade Has Unintended Consequences for the Markets
https://www.wsj.com/economy/central-banking/scott-bessents-yen-trade-has-unintended-consequences-for-the-markets-5297044b
The way it’s being done should make us worry that the Federal Reserve is being roped into easing monetary conditions.

A Currency Trader at Heart, Bessent Bets on Japan’s Yen
https://www.nytimes.com/2026/08/04/business/economy/bessent-yen-currency-support.html
Coordinated intervention allowed Japan to support its currency without selling off its U.S. debt holdings. 
 
Yen Intervention Is Bessent's Latest Band-Aid Fix For Bonds
https://www.fa-mag.com/news/yen-intervention-is-bessent-s-latest-band-aid-fix-for-bonds-87980.html 

Brazil – Risks and Opportunities

Brazil faces unforgiving economics after election
https://www.ft.com/content/d47f9b39-9e78-4034-97a2-1ca8e07e27e8
For investors, that is a reason for engagement, not despair. Brazil trades at humbling valuations. It has some of the world’s highest real interest rates and the currency is at near record lows with the real down 70 per cent over the past 15 years despite an 8 per cent bounce over the past year. If it gets the sequence of economic management right — consolidation, disinflation, then building growth — the country is a compelling opportunity. 

Financial Risks - Time to Pay Attention

The next crash: why this time might not be different  
https://www.ft.com/content/de2978b0-481c-4af5-9e77-9e34650fb20f

A.I. Is Running on Borrowed Money
https://www.nytimes.com/2026/07/17/business/ai-spending-oracle-stocks-bonds.html
Risk is rising as big tech companies like Oracle — the ultimate financial source of the Ellison media empire — need to turn to the bond market for staggering sums to finance data centers. 

The Massive Supply Deals Feeding the AI Frenzy Are No Sure Thing
https://www.wsj.com/finance/the-massive-supply-deals-feeding-the-ai-frenzy-are-no-sure-thing-3a89ec09
Long-term arrangements touted by companies like SK Hynix aren’t as solid as they seem.

 
How long until there is a US markets reckoning over Trump’s damage?
https://www.ft.com/content/fcbd9074-8870-4f04-b0a6-0c22a2aca70e
 
How Sky-High Deficits Threaten the Bond Market
https://www.wsj.com/finance/investing/how-sky-high-deficits-threaten-the-bond-market-eeddd168

MY TAKE: The AI bubble could be worse than the dot-com bust by Vivekanand Jayakumar, The Hill - 06/16/26

https://thehill.com/opinion/finance/5925202-tech-bubble-ai-driven-growth/

Ramaswamy on Wealth Inequality

How Government Spending Enriches the Wealthy
https://www.wsj.com/opinion/how-government-spending-enriches-the-wealthy-4ad7375e
Covid relief programs and easy Fed policy inflated the value of assets such as stocks and real estate.
 
Vivek Ramaswamy notes:
American wealth is concentrated at the top. On this narrow point, the socialists are correct. The top 1% now holds roughly 30% of the nation’s net worth, and the bottom half holds about 2.5%. But the greatest driver of inequality over the past five years was exactly what the socialists now demand more of: large-scale government spending.
When Washington floods the economy with borrowed and freshly printed dollars, the money flows first into assets owned by the wealthiest Americans—stocks, bonds, real estate. Six relief laws pushed roughly $4.6 trillion out the door in the bipartisan response to the pandemic. The Federal Reserve cut interest rates to zero and more than doubled its balance sheet, from about $4 trillion to nearly $9 trillion. 

Reagan Tax Cuts and Budget Deficits

The Surprising Truth About Reagan’s Tax Cut
https://www.wsj.com/opinion/the-surprising-truth-about-reagans-tax-cut-3f0794aa
It widened the deficit—not by cutting the top rate, but purely by relieving families from automatic increases through bracket creep. 

Policy Distortions and the Affordability Crisis

Half of America Cannot Afford to Live, and Other Wrong Numbers
https://thedispatch.com/article/affordability-crisis-healthcare-housing-childcare/
On the affordability discourse.