A Warning of a Supply-Demand Breakdown in U.S. Long Bonds: Ray Dalio Diagnoses the Bond Market's Heart Attack

Published Thursday, September 3, 2026 · Rates, market figures and outlooks in this article reflect its publication date and may differ today. Ask us for the latest picture. Translated from the Korean original.

Ray Dalio, founder of Bridgewater Associates, the world's largest hedge fund, recently issued a strong warning about a structural supply-demand breakdown and debt problem in the U.S. bond market in a column contributed to TIME magazine. Titled "The Bond Market's Supply and Demand Problem," the piece cuts right to the fundamental cause of the long-bond yield surge we examined earlier, and offers important insights for gauging the direction of Canadian fixed mortgage rates, which are closely linked to U.S. Treasuries.

Key Points

• Hardening of the debt arteries and a "financial heart attack": Ray Dalio likens the credit circulating through the economy to "blood," and interest payments that grow faster than incomes to "plaque" building up in the arteries, warning that this eventually crowds out essential spending and triggers a "financial heart attack."
• Rising rates from a supply-demand imbalance: As debt-service burdens grow and Treasury supply overwhelms demand, a tipping point is reached where bond prices plunge and interest rates structurally climb even higher.
• Concern that a crisis will materialize around 2027: In a book published in 2025, he predicted that the breaking point of this fiscal crisis would come around 2027 (±2 years), and he assesses that the current U.S. debt situation is tracking that expected trajectory exactly.
• A warning about concentrating in long bonds: He advises investors to recognize the long-term consequences of national debt and to be very careful about over-concentrating in long-duration debt assets.

What It Means

Ray Dalio's TIME column confirms once again that the recent tantrum in long-term U.S. Treasury yields (bear steepening) is not mere market whim, but the result of a structural disease: snowballing national debt and a supply-demand imbalance. The "falling value of long bonds and rising rates" he warns of becomes the driving force pushing up Canada's 5-year government bond yield, and this is the biggest barrier preventing Canadian banks from cutting fixed mortgage rates. At a time when one of the world's top investors is warning of a debt-driven "financial heart attack," it is very risky to rely solely on a vague expectation that the central bank will cut rates. We should take seriously the master's warning that a long-term high-rate environment could become structurally entrenched. If you have an upcoming mortgage renewal or are planning funds for a home purchase, we recommend that, given the highly volatile market, you calculate your loan-repayment capacity even more conservatively and put in place a careful strategy to protect your household cash flow.