U.S. national debt about to reach bleak $40 trillion milestone — and it’s likely hit $50 trillion soon
Bank of America’s chief equity strategist Michael Hartnett, expects that debt milestone will be reached by 2029. That’s creating some preferences for stocks over bonds.
The US national debt is on track to reach $40 trillion, a milestone that is expected to be hit relatively soon, and $50 trillion by 2029, according to Bank of America's chief equity strategist Michael Hartnett. This growing debt burden is likely to influence investor behavior and preferences, with a notable shift towards stocks over bonds.
In the bond market, this development is significant because it implies that the supply of government debt will continue to swell, potentially putting upward pressure on yields and making bonds less attractive to investors. As the debt grows, so too does the risk of higher inflation and reduced credit ratings, which can further erode the appeal of government bonds.
Looking ahead, investors in the bond market will be watching to see how the US government's fiscal trajectory evolves, and whether policymakers take steps to address the growing debt burden. Key indicators to watch include upcoming budget announcements, interest rate decisions by the Federal Reserve, and any potential shifts in the government's borrowing strategy.
Originally reported by marketwatch.com. BondNews adds analysis for finance & markets readers.