Ray Dalio Warns U.S. Treasury Selloff Is Long Way From Finished

Billionaire investor Ray Dalio warned that the prolonged downturn in the U.S. Treasury market is far from complete. He pointed to a growing clash between massive government debt issuance and diminishing buying interest from major foreign institutions, stating that higher borrowing costs will be required until economic activity slows enough to balance supply and demand.

America's debt burden relative to tax revenues has reached its highest level since the end of World War II. The U.S. government needs to roll over about $10 trillion in maturing debt this year alongside $2.1 trillion in new deficit spending. Meanwhile, key overseas investors such as Japan and China have reduced purchases. At the same time, the Treasury faces funding competition from companies issuing debt for artificial intelligence infrastructure. Benchmark 10-year Treasury yields have approached 5.4%, a near 25-year high, while the Bloomberg U.S. Treasury Index is down roughly 2.4% this year.

Investors remain divided over fixed-income assets. While Dalio favors gold and short positions on sovereign debt, other major money managers view multi-decade high yields as an attractive buying point. Market participants will be watching whether equity market volatility increases to match bond market turbulence. On Tuesday, the iShares 20+ Year Treasury Bond ETF (TLT) rose 0.42%, while equity funds showed mixed movement, with the Invesco QQQ Trust Series I (QQQ) dipping 0.54%.