Dalio warns US Treasury selloff will deepen as foreign demand fades

Ray Dalio, founder of Bridgewater Associates, said in an essay posted on LinkedIn on October 13 that the decline in US Treasuries is likely to run further, as heavy government debt issuance meets weaker demand from large foreign buyers.

"The bond bear market probably has a long way to go," Dalio wrote, according to Asianet Newsable, arguing that the cycle will not settle until higher borrowing costs slow the economy enough to bring supply and demand back into balance. He described a loop in which rising issuance pushes yields up, increasing federal interest costs and requiring still more borrowing.

By Dalio's measure, which compares total debt and debt-service costs with tax revenue, the US debt burden is at its highest since the end of World War II. The government must roll over roughly $10 trillion of maturing obligations and finance $2.1 trillion in new deficit spending, he said, and even a small drop in reinvestment rates would leave a sizable funding gap.

Dalio pointed to Japan and China as holders likely to trim purchases, noting Japanese policy incentives to repatriate capital and the country's $1.1 trillion in US debt. He also cited corporate borrowing for artificial intelligence infrastructure as competition for capital.

The Bloomberg US Treasury Index has fallen about 2.4% in 2026, with 10-year yields near 5.4%. Strategists at BlackRock and Morgan Stanley Investment Management have turned more positive on bonds.

This story was first reported by Asianet Newsable.