Markets price U.S. Treasuries as risky when yields rise on fiscal news, Luis Garicano notes

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08.05.2026

Markets price U.S. Treasuries as risky when yields rise on fiscal news, Luis Garicano notes — Markets treat U.S. Treasuries as risky

Luis Garicano, industry influencer, highlights insights from a presentation by Hanno Lustig at Hoover Institution regarding the changing perception of the U.S. Treasury market.

He notes that while policymakers continue to treat Treasuries as safe debt, the market has begun to price them as risky assets. According to Garicano, when yields rise in response to fiscal news, the Federal Reserve steps in by purchasing bonds, which he suggests undermines market functioning.

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Garicano has commented on related market discrepancies in previous analysis. He discussed how a security shock is widening the economic divide in Europe, with Poland’s per capita GDP catching up to the U.S. share. These observations add context to his recent remarks on shifts in perceived financial safety.

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