"Investors are usually focused on the U.S. government bond market for two reasons: It's the biggest, and the dollar is the world's reserve currency. That scrutiny has increased this year because of President Trump's One Big Beautiful Bill Act, which marginally increases the U.S. deficit and thus, in theory, increases the risk-based yield premium that investors demand for buying them."
"the yield on the 10-year Treasury has actually declined this year, from over 4.5% in January to just over 4.1% today. That implies investors think U.S. bonds are somehow less risky than they were before. The reason investors may think that is because in Europe the governments of France and the U.K. are making America look like a relative safe haven."
"France was ranked as the most likely country to go into a bond crisis-where investors become convinced that a government won't be able to pay its debts on time, and begin a global run on its Treasury-according to Deutsche Bank's Q3 survey of 280 analysts globally. More than 50% of them ranked France as their first choice for bond market mayhem."
Wall Street is considering a possible government bond crisis driven more by relative risk comparisons than immediate U.S. vulnerability. Europe's fiscal instability, notably in France and the U.K., is making U.S. Treasuries look safer. France was ranked by Deutsche Bank's Q3 survey of 280 analysts as the most likely country to experience a bond crisis. Political instability in France has included two governments collapsing in 12 months and the prospect of a fifth prime minister in two years. U.S. 10-year Treasury yields have fallen this year from over 4.5% to just over 4.1% despite deficit increases under the One Big Beautiful Bill Act. Bond pricing reflects comparative government credit risk as much as absolute fiscal metrics.
Read at Fortune
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