Everything on Fiscal & Bond Markets

Fiscal policy uncertainty is contributing to a steeper yield curve, as long-term rates reflect higher inflation risk premia and real interest rate pressures from increased investment demand. This dynamic is shaping the bond market's pricing of long-term risk.

Impact: A steeper yield curve reflects higher term premiums, which can impact government borrowing costs and private investment. This fiscal-monetary interplay suggests that the US bond market is pricing in a longer period of elevated rates, with implications for fiscal sustainability.

— from Fed Pause, AI Wealth Effect, and Inflation Risks · Bloomberg Daybreak: US Edition· Jan 28, 2026