Latest / The National Debt Podcast with Fexingo: Treasury, Borrowing, and Long-Term Fiscal Outlook
How Fiscal Dominance Is Rewiring the Bond Market
With federal debt nearing thirty-nine trillion dollars and interest rates holding near four percent, the U.S. government faces a new constraint: fiscal dominance. Lucas and Luna examine how the Treasury’s reliance on short-term borrowing to manage cash flow creates a feedback loop that forces the Federal Reserve’s hand. Using current ten-year yields of nearly five percent and a narrowing spread between short and long-term Treasuries, they explore why bond vigilantes may no longer be needed when the borrower becomes the regulator’s primary concern.
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