Rising US debt, fueled by a new budget bill, is causing Treasury yields to spike. The Institute of International Finance (IIF) warns this isn't just an American problem; volatility in US Treasury bonds will impact global bond markets. The IIF cites interconnected economies and a potential buyer's strike among foreign investors. While the US Treasury market remains large and liquid, the increased demand crowds out other markets, particularly impacting emerging markets with limited access to international capital. Recent weak auctions in Japan further illustrate this global interconnectedness.

Prepared by Christopher Adams and reviewed by editorial team.