When The Debt Levee Breaks

Federal debt has surged to $40 trillion, with annual deficits near $2 trillion and interest to service that burgeoning debt load now the second largest budget item. 30-year Treasury yields have surpassed 5.1%, and inflation has remained above official Fed targets for over five years now. AI-driven debt issuance is nearly $500 billion year-to-date, with off-balance sheet liabilities and negative free cash flow at hyperscalers raising systemic risk. Meanwhile, equities are trading near 1999 valuation levels despite the recent sharp pullback in semiconductor names.