Key risks of US Treasuries highlighted as deficits widen, potentially forcing new bond issuances to raise interest rates.

On May 30, Chris Iggo, chairman of the AXA Investment Management (AXAIM) Investment Research Institute, pointed out in a report that the key risk for U.S. Treasuries is that as the fiscal deficit widens, new bonds may need higher coupon rates to attract more buyers. "This pushes up market yields and drives down existing bond prices, leading to negative price returns for bond portfolios," he said. For foreign investors in U.S. Treasuries, there are also concerns that the real value of their holdings could shrink due to high U.S. inflation and a further weakening of the U.S. dollar, Iggo added. Despite Washington's unconventional policy direction, there is no indication that the United States will monetize its debt and fiscal sustainability inflation.