Dalio: Intensified Infighting After Midterm Elections May Drive Up Short-Term U.S. Treasury Yields

Ray Dalio, founder of Bridgewater Associates, analyzed the results of the U.S. midterm elections, believing that the elections will not change the core issues facing the United States, such as debt, wealth and value divergence, geopolitical tensions, climate change, and technology. He pointed out that future conflicts between parties and within parties, as well as government dysfunction, may intensify. Dalio mentioned that funding issues will soon come to the forefront: on December 11, Trump's temporary funding will expire, and the federal debt is expected to hit its ceiling by March 2027, with the Treasury expected to exhaust its funding maneuvering options by the fall of 2027. He believes that the related conflicts may be quite fierce, and the uncertainty could drive up short-term yields on U.S. Treasury bills, exacerbating concerns about liquidity and credit risk, thereby weakening the status of U.S. Treasuries as a major global safe collateral. Additionally, Elizabeth Warren's appointment as chair of the Senate Banking Committee may trigger conflicts and changes that impact the economy and markets. The election results will make Trump a targeted lame-duck president, weakening the United States' international standing and potentially leading to a strategic contraction of the U.S., increasing the influence of regional powers like China.

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