Can the US Defy Fiscal Gravity?

• Long-term US Treasury yields and real rates have reached 25-year highs, primarily due to US deficits exceeding 6% of GDP and the increasing need for domestic funding.
• Attempts by the Treasury Secretary to influence long-term bond yields are deemed inappropriate, as this falls under monetary policy, which should be managed by the Federal Reserve.
• While the US stock market, particularly the tech sector, remains resilient, the long-term fiscal trajectory of the US is a major concern for global financial stability, with warnings of potential future reckoning.

The discussion highlights the significant rise in long-term US Treasury yields, driven by structural issues like persistent government deficits and increasing domestic borrowing needs. Experts express concern about the sustainability of US fiscal policy, despite the US dollar's current safe-haven status, and warn that markets are not yet sending strong enough signals to policymakers.