Massive debt makes the U.S. one of the world’s most vulnerable countries in the energy crisis, market veteran warns

Rockefeller International chair Ruchir Sharma warns that record global and U.S. debt levels leave markets especially vulnerable to the Iran-driven energy shock, raising fiscal and monetary constraints that could push bond yields higher and pressure equities. Weak demand at recent U.S. Treasury auctions and rising long-term yields signal investors demanding higher risk premia as governments may need to increase spending for the conflict. The Federal Reserve’s inability to hit its 2% inflation target complicates prospects for rate cuts to cushion an economic slowdown. Analysts fear larger deficits (and proposed big defense spending) will exacerbate debt-servicing costs and trigger bond selloffs, which would feed into higher mortgage and benchmark rates and weigh on the US SP 500 and broader market sentiment.