Treasury Debt Loses Its Safe-Haven Luster as Markets Reprice Risk

Stanford economist Hanno Lustig argues U.S. Treasuries no longer provide superior risk-adjusted returns or a guaranteed safe haven; investors are seeking higher-yield, high-grade corporate debt and non-dollar assets, the traditional stock–Treasury link has weakened, foreign buyers and banks are retreating, and the Fed is reducing its Treasury holdings, leaving deficits funded more by yield-seeking investors than safety—hinting at potential mispricing of risk and a move toward financial repression if policymakers cling to the old safe-debt mindset.