Source: Fortune.com
Summary
Martha Gimbel, executive director of the Yale Budget Lab, compares the bond market’s relationship with U.S. debt to a Hallmark movie trope, where a busy professional settles for a less-than-ideal partner until they find a better option. Gimbel warns that investors are currently settling for U.S. debt due to lack of alternatives, but this may change as other options emerge. She notes that the U.S. debt market remains in high demand, but its size and liquidity may not be enough to sustain it in the long term. Europe’s efforts to make its debt more appealing to investors could potentially worsen the U.S. debt outlook.
Our Reading
The numbers tell one story.
Martha Gimbel’s analogy highlights the bond market’s lukewarm affection for U.S. debt. The U.S. debt market’s size and liquidity keep it in demand, but its appeal is waning. Europe’s efforts to boost the euro’s reserve status and Switzerland’s safe-haven assets may soon give investors alternative options. As Gimbel warns, making the U.S. less attractive to markets increases the likelihood of a fiscal crisis. The U.S. debt market’s status as the “boyfriend” in Gimbel’s analogy may soon come to an end.
The U.S. debt market’s “Hallmark movie” moment may be just around the corner.
Author: Evan Null
