Bloomberg Surveillance · Thursday, September 24, 2026
The recent repricing in the bond market, particularly for long-term debt, has been predominantly driven by the Federal Reserve's actions, with minimal influence from the fiscal story or term premium. Despite a less-than-ideal fiscal situation, growth acceleration may lead to slightly smaller deficits.
“I would say my read of the repricing so far this year is the large vast majority has been driven by the Fed. There's been very little term premium. There's been very little in terms of the fiscal story that has changed.”
“Now, the fiscal story isn't great, but it hasn't changed this year. Expected deficits are right in that 6% area. If anything, the fact that growth is accelerating a little bit take some of the pressure off the fiscal story in the background.”
“So we have a better shot at achieving a slightly smaller deficit in the coming years if that growth story stays in place.”