The US could be on course for a crisis in its bond market, replicating that which hit the UK in September 2022 when financial markets went into turmoil after the short-lived Liz Truss Tory government proposed major tax cuts funded by an increase in government debt.
The UK crisis, which required intervention by the Bank of England, had its own peculiarities bound up with the operations of pension funds. But it may well have been a foretaste for a much bigger crisis that could engulf the US financial system.
This scenario was outlined by Phillip Swagel, the director of the Congressional Budget Office (CBO), in an interview with the Financial Times (FT) yesterday. He said growing US government debt was on an “unprecedented” trajectory risking the kind of crisis which led to the collapse of the Truss government.
“The danger, of course, is what the UK…
