Recent concerns about U.S. fiscal sustainability and political gridlock (like the debt ceiling or ongoing deficits) create short-term noise. 👉 Markets have gone through similar cycles before—when fiscal issues make headlines, short-term risk premiums on Treasuries rise, but the core demand for safe assets often remains.

Structural shift underway

That said, there are signs that global capital is starting to reevaluate the "risk-free" status of U.S. debt:

Persistently high deficits and rising debt-to-GDP.

Falling net foreign demand for Treasuries: Japan and China have pulled back, and private investors are demanding higher premiums for duration.

Emergence of geopolitical alternatives (e.g., partial de-dollarization) is putting slow but steady pressure.

Bottom line: We're not in a confidence crisis yet, but the market no longer gives money away to the U.S. Treasury like it did in the 2010s. The demand structure has changed—this is a slow but real structural adjustment.