Global investors are dumping long-dated bonds. The U.S. could be next
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Across the globe, investors are selling off long-duration bonds, pushing up 30-year yields.
Why it matters: If U.S. investors follow their global counterparts and drive yields higher by selling long-dated debt, that could be a serious headwind for stocks.
What they're saying: "It would be a meaningful problem for equities," John Porter, chief investment officer at BNY Investments Newton, tells Axios.
- Billionaire Ray Dalio just told the Financial Times global excess spending could cause a "debt-induced heart-attack in the relatively near future."
Catch up quick: Global debt hit a record $324 trillion in early 2025, according to the Institute of International Finance.
- The pandemic spurred inflation, causing central banks to raise interest rates, which made global debt more expensive to carry.
- As debt grows pricier, it becomes riskier, since governments could face increasing difficulty paying it back.
- That's part of what's driving up yields: Investors are demanding more compensation for the risk of holding ballooning sovereign debt.
Zoom in: Over coffee in midtown, U.S. Bank's Eric Freedman likened the bond market to a Brazilian steakhouse.
- For years, U.S. Treasuries were the prime cut everyone wanted.
- But as Washington keeps carving up more meat (issuing more debt) and questions about Fed independence, tariffs, and global tensions pile on, foreign diners are sampling other dishes.
- That could be part of what's driving gold's record rally while global long-dated bonds sink: Investors are looking to diversify the safe-haven assets in their portfolios away from bonds.
Yes, but: While U.S. yields have been rising, the climb hasn't been as steep as in other countries.
- That suggests investors may be pricing in a rebound in U.S. growth, which could require higher rates in the future, rather than just fiscal deficit risks.
- That mirrors the calls from equity analysts claiming we're in the early stages of another growth cycle that will benefit the S&P 500.
What we're watching: Where the money goes.
- Investors selling their long-dated foreign bonds are likely to keep their money in cash near term, Porter said.
- But if bullishness on the stock market continues, that could lure sidelined investors back in.
