Ray Dalio says to concern the bond market as deficit turns into critical-OxBig News Network

Billionaire investor Ray Dalio on Thursday sounded one other alarm on hovering U.S. debt and deficits, saying it ought to make buyers petrified of the federal government bond market.

“I feel we needs to be afraid of the bond market,” Dalio mentioned at an occasion for the Paley Media Council in New York. “It’s like … I’m a physician, and I’m wanting on the affected person, and I’ve mentioned, you are having this accumulation, and I can let you know that that is very, very severe, and I can not let you know the precise time. I might say that if we’re actually wanting over the subsequent three years, to present or take a 12 months or two, that we’re in that sort of a vital, vital scenario.”

The founding father of Bridgewater Associates, one of many world’s largest hedge funds, has warned concerning the ballooning U.S. deficit for years. Recently, buyers have begun demanding decrease costs to purchase the bonds that cowl the federal government’s large price range deficits, pushing up yields on the debt. Rising worries concerning the fiscal scenario final week triggered a high-profile credit standing downgrade from Moody’s.

The yield on the 30-year Treasury yield on Thursday traded at levels not seen since 2023, round 5.14%.

Rising financing prices together with continued spending development and declining tax receipts have mixed to ship deficits spiraling, pushing the nationwide debt past the $36 trillion mark. In 2024, the federal government spent extra on curiosity funds than every other outlay aside from Social Security, protection and well being care.

“We can have a deficit of about 6.5% of GDP — that that’s greater than the market can bear,” Dalio mentioned.

Dalio mentioned he is not hopeful politicians would have the ability to reconcile their variations and reduce the nation’s debt load. In a celebration line vote early Thursday, House members approved legilsation that lowers taxes and provides navy spending. The invoice — which now goes to the Senate — might increase the U.S. government’s debt by trillions and widen the deficit at a time when fears of a flare-up in inflation due greater tariffs are already weighing on bond costs and boosting yields.

“I’m not optimistic. I’ve to be sensible,” Dalio mentioned. “I feel it is the essence of the problem of our nation that something associated to bipartisanship and getting over political hurdles … primarily means ‘give me extra,’ which results in these deficits.”