Why long-term US Treasuries look expensive

Long-term US government bonds may be priced too high given the risks around them, the Financial Times argued. The article points to heavy spending on both defense and social programs. It also points to doubts about how long America can keep its leading place in the world.

The logic is simple. When a government borrows more and more, lenders eventually want a higher return to keep holding its debt. That pushes bond prices down. With inflation already high, a 10-year or 30-year Treasury that pays a fixed rate looks like a weaker deal.

This is the heart of the sound-money worry. Sound money means money that holds its value over time. Washington runs large deficits and relies on the Fed and foreign buyers to fund them. As long as inflation eats into fixed payments, the buyer of a long-term bond takes on real risk for a small reward.

It connects to the day's other news. The same inflation pressure that ties the Fed's hands also weighs on the bonds the government must keep selling. If trust in the dollar's long-term value slips, the cost of all that borrowing rises. That helps explain why investors keep moving toward gold.