Foreign bond investors are 'extremely concerned' about US deficits

Foreign bond investors are 'extremely concerned' about US deficits while the risk of China and Japan dumping Treasurys looms large
https://finance.yahoo.com/news/foreign-bond-investors-extremely-concerned-203001933.html

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Summary

Foreign investors are increasingly concerned about the trajectory of US deficits, with some even warning of a possible default in the future. This concern is compounded by rising global interest rates, which make US bonds less attractive to investors. China and Japan, two of the largest holders of US debt, loom as prime near-term disruptors, as both countries could be incentivized to sell Treasuries to prop up their respective currencies.

Key takeaways:

Foreign investors are "extremely concerned" about US deficits.
US bond yields are climbing globally, which could put upward pressure on US rates.
Government overspending is projected to keep pushing US debt up.
China and Japan loom as prime near-term disruptors, as both countries could be incentivized to sell Treasuries.
The article also mentions that US Treasury demand has been hitting another headwind as yields around the world have shot up as well. This makes US bonds less attractive to investors, as they can now get higher yields on investments in other countries.

The overall message of the article is that the US government needs to get its fiscal house in order, as rising deficits and debt are causing increasing concern among foreign investors. This concern could lead to a sell-off of US Treasuries, which would have negative consequences for the US economy.

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Comment

One of the main reasons for the rise in U.S. Treasury yields is believed to stem from the U.S. government's excessive spending.

Add to that the fact that countries like China and Japan are dumping U.S. Treasuries, and it becomes even more concerning.

Let's face it, even if it's the currency or sovereign debt of a hegemonic power, the side effects of excessive fiscal spending, chronic fiscal deficits, and the resulting spike in sovereign interest rates are hard to ignore.