Daly warns on U.S. bonds

Billionaire Ray Dalio warned that the U.S. Treasury bond market may face potential pressures if China and Japan reduce their substantial holdings of U.S. debt. The United States relies on foreign financing for one-third of its debt, with China and Japan being major stakeholders. He explained that a decline in these lenders could push bond yields higher and increase borrowing costs, especially as the yield on the 10-year Treasury bond has risen to around 5.3%, the highest level since 2002. At the same time, investor confidence is waning, and pressures are intensifying on the global bond market. Dalio also cautioned about increasing financial stresses on major technology companies and the continued erosion of confidence in U.S. economic prospects, stemming from criticisms of the Treasury’s policies and inaccurate inflation and housing market forecasts. He emphasizes that a reduction in demand for Treasuries from China and Japan could pose significant risks to the U.S. economy in supporting its growing debt, amid mounting doubts about the sustainability of external financing and financial stability.

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