For the first time, the size of the United States Treasury debt was over $40 trillion, just over the past five months. As the fiscal deficit and the demand for debt continued to expand, the return on long-term United States debt, the cost of corporate finance and the pricing of venture assets again became the focus of market attention.

Long end rate of return maintained high

Data from the United States Department of the Treasury indicate that total outstanding public debt has exceeded $40 trillion. The continued rise in the size of debt means that Governments need more financing, usually putting upward pressure on long-term sovereign debt yields and raising overall borrowing costs.

This week, there was a marked increase in the return on United States debt. Subsequently, the United States Government expanded its long-term public debt buy-back operations and temporarily eased bond market sentiment, but long-term financing costs remained high.

The stock market is stronger than that.

Higher rates of return usually lower the valuation of equities, affecting, in particular, the high valuation technology unit. On the one hand, the cost of corporate finance has risen; on the other hand, the attractiveness of bonds vis-à-vis equities has increased and the allocation of funds has adjusted accordingly.

The encryption market has recently moved in the opposite direction. Bitcoin lags behind the long-term rate of return by up to $72,000, with a synchronized improvement in risk preferences, indicating that funds remain highly sensitive to changes in interest rates.

The increase is not just due to new debt.

It was mentioned that the round of Bitcoin was not triggered by a US debt breakthrough of $40 trillion alone. More immediate factors include the United States Treasury's expansion of long-term national debt buy-backs, a larger levelling of the encryption market and a more active encryption policy signal from Washington.

  • United States Treasury debt has exceeded $40 trillion.
  • The statutory debt ceiling is 41.1 trillion United States dollars
  • The two-party policy center expects to touch the ceiling in 2027 or again.

However, the continued expansion of government debt continues to reinforce a long-standing narrative of Bitcoin: As fiscal deficits and borrowings continue to rise, so will market concerns about the purchasing power of the French currency and the devaluation of the currency.