Bridgewater Founder Ray Dalio: U.S. Political Infighting Intensifies After Midterm Elections, Could Drive Up Short-Term Treasury Yields

On November 10, Bridgewater Associates founder Ray Dalio published an article discussing the U.S. midterm election results, stating that the election would not alter core challenges facing the United States, including debt, wealth and value polarization, geopolitics, climate, and technology. He warned that infighting between political parties and within factions, along with government dysfunction, are likely to intensify in the future.

Dalio pointed out that funding issues will surface in succession: interim appropriations are set to expire on December 11, the federal debt is expected to reach its ceiling in March 2027, and the Treasury Department is projected to exhaust its borrowing maneuvers by autumn 2027. He cautioned that the ensuing disputes could be highly intense, with uncertainty potentially driving up short-term yields on U.S. Treasury bills and other instruments, heightening concerns over liquidity and credit risks, and undermining the status of U.S. Treasuries as the world's premier safe-haven collateral.

He also noted that Elizabeth Warren's appointment as chair of the Senate Banking Committee could trigger conflicts and policy shifts impacting the economy and markets. The election results will transform Trump into a targeted "lame-duck" president, weakening America's international standing and potentially prompting a strategic pullback by the U.S., thereby enhancing the influence of major regional powers such as China.