A Liz Truss-style bond market meltdown could hit the US by mid-2025, warns the CEO of deVere Group, one of the world’s largest financial advisory and asset management organisations.
The warning from Nigel Green came during a fully subscribed client webinar on Friday following a panel discussion about President Donald Trump’s proposed $9.5 trillion tax cuts, which are sparking fears of an unsustainable fiscal crisis in the United States.
The extraordinary scale of the tax cuts, which Trump has vowed to implement, needs to be financed – hence his apparent fascination with tariffs.
But even in the most extreme scenario—slapping a 20% tariff on all imports and a staggering 60% on Chinese goods—this would only raise $4.5 trillion, less than half of what’s required.
“This fiscal black hole is getting larger and larger and sending the budget deficit of the world’s largest economy skyrocketing,” warns Nigel Green, CEO of deVere Group.
“Bond markets are watching closely, and there’s a legitimate risk that if investors get spooked and start selling off US Treasuries en masse, we could see a repeat of the UK’s Liz Truss debacle —but on a much larger, more devastating scale.”
With the deficit spiralling out of control, bond investors could demand sharply higher yields to compensate for the risk, pushing up borrowing costs across the board.
If the Federal Reserve is forced to hike rates again to stabilise the situation, this would hammer businesses, homeowners, and financial markets alike.
“Trump’s tax-slash bonanza, without viable funding mechanisms, could set the stage for a full-blown fiscal crisis,” Nigel Green continues.
“The US dollar—currently a pillar of global stability—would be thrown into chaos. And let’s be clear: if the bond market revolts, it won’t be just an American problem; it will ripple across the world.”
The looming crisis bears striking similarities to the UK’s 2022 financial turmoil under former Prime Minister Liz Truss. Her aggressive tax-cutting spree without credible fiscal backing led to a swift and brutal bond market backlash, forcing an emergency U-turn that ultimately ended her premiership.
“Now imagine that scenario—but with the US, the world’s largest bond market,” says Green. “This would make the UK gilt crisis look like a minor tremor before an earthquake.”
deVere Group is urging investors to prepare for heightened market turbulence.
“A US bond market tantrum would send shockwaves through equities, currencies, and commodities,” Nigel Green cautions. “Defensive assets, strategic diversification, and hedging strategies will be key.”
He concludes: “If the bond market loses faith in US fiscal credibility, the fallout will be historic.”