Money

The Hill - The House and Senate both passed legislation on Friday to fund the Department of Homeland Security (DHS) and end one of the longest government shutdowns in the history of Congress — but not the same legislation. For all the activity of the past 36 hours, the impasse over DHS is no closer to being broken and the parties appear as far apart as they were when the agency was first shut down on Feb. 14.

New Republic -  The U.S. government is staring down a projected $1.9 trillion deficit for this fiscal year, with the total national debt now pushing $39 trillion. Simultaneously, the expanding war in Iran and the subsequent crisis in the Strait of Hormuz have fractured global energy supply chains, driving Brent crude to $119 a barrel and sparking a massive inflationary shock. By any standard metric of sovereign risk, a state that is rapidly accelerating its debt issuance while engaging in a war of choice that is throttling the worldwide supply of oil should be facing the possibility of having its bonds repriced.

Yet Wall Street and Washington continue to treat U.S. Treasuries as the ultimate “risk-free” asset, resting comfortably on the AA+ and Aa1 ratings assigned by the major credit agencies. For decades, these ratings have been the financial expression of an imperial dividend. They bank on the assumption that American military power will guarantee both global economic stability and the dollar hegemony required for the United States to service its debts, in perpetuity.

This pristine rating is no longer a reflection of reality. Many countries are beginning to explore alternatives to the petrodollar. And the physical infrastructure and foreign policy that underpin its value are in tatters, replaced by a series of ad hoc military strikes in the Persian Gulf and temporary waivers to “protect” American consumers from the resulting inflation (like the recent suspension of the Jones Act, as well as the suspension of sanctions on Russian and Iranian oil at sea).

Simultaneously, Trump is calling on the U.S. to borrow trillions of dollars to finance the military, while signaling that the U.S. may withdraw from policing the Strait of Hormuz altogether. Viewed in this light, the “full faith and credit” of the U.S. government is poised to hit a hard limit in the near future. The Congressional Budget Office estimates that the net cost of interest will top $7,700 per household in fiscal year 2026, with the total amount topping $289,000 per household. But for whatever reason, the bond market is failing to price in the risk of the U.S. fighting perpetual wars, whose primary exports are no longer oil but instability.