Bill Dudley, Columnist

The Real Reason to Worry About the Huge US Budget Deficit

Don’t fret about the immediate effect on money markets. Do fear that the bond vigilantes will reawaken.

June 26, 2024 at 6:00 AM EDT

Corrected

June 26, 2024 at 7:10 AM EDT

Bill Dudley, a Bloomberg Opinion columnist, served as president of the Federal Reserve Bank of New York from 2009 to 2018. He is the chair of the Bretton Woods Committee, and has been a nonexecutive director at Swiss bank UBS since 2019.

Risk factor.
Photographer: Hannah Beier/Bloomberg

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The US government’s finances keep looking worse. The latest Congressional Budget Office projections suggest that it will need to borrow an added $400 billion this year to cover its budget deficit — and trillions more over the next decade.

Investors have plenty of legitimate reasons to worry about this trend. The immediate effect on money markets isn’t one of them.

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