Dutch International: The bond market reflects fiscal risks and concerns about the independence of the Federal Reserve.

Dutch international group interest rate strategists said in a report that increased government spending is accompanied by financial risks, and Japan reminded the market last week not to overlook these risks, especially US Treasury investors. These strategists stated that although the latest US deficit data shows some improvement, the average expectation shows that the budget deficits in 2026 and 2027 will still be far above 6%. They said that at the same time, the US relies on foreign investors to fund its current account deficit. "While we have not seen any signs of de-dollarization imminent, we do see the risk that geopolitical tensions and challenges to the independence of the Federal Reserve will reduce the attractiveness of US Treasury bonds as a safe asset," the strategists said, adding that this has kept the yield on 10-year US Treasury bonds at high levels, making the yield curve steeper.