Ray Dalio Warns U.S. Debt Spiral May Persist as Treasury Supply Grows

Ray Dalio warned that rising U.S. bond supply is pushing yields and borrowing costs higher, a cycle he said could deepen government debt unless economic and market damage restores balance between funding supply and demand.

The 10-year Treasury yield approached 5.4% this month, reaching its highest level in nearly 25 years. Higher yields raise borrowing costs for the government and other borrowers.

Dalio, founder of Bridgewater Associates, has long warned about U.S. debt. He said the cycle would be difficult to stop unless high interest rates caused enough disruption to the real economy and financial markets to rebalance the supply and demand for funds.

After yields reached a recent high, some investors and strategists shifted toward a more positive view of U.S. government bonds. BlackRock and Morgan Stanley Investment Management were among those who viewed the higher yields as attractive for investment.

Dalio has previously urged investors to sell bonds and buy gold and Bitcoin (BTC).