The hidden messages the bond market is sending -2-

I worry this snowballs slowly until it saps a government's ability to spend on what it actually wants, whether that's defense, infrastructure or healthcare. The U.S. doesn't run the biggest budget deficit in the world, but it matters more than any other country. If the U.S. has a financial sneeze, the rest of the world doesn't get a nasty cold. It gets a full-on lung infection.

MarketWatch: Is there a historical parallel for the AI boom that investors should know about?

Wigglesworth: There are parallels between the 19th-century railway boom and the AI boom today. The bond market is a magical tool for financing big projects. The U.S. showed you could use it to finance national projects like railways.

Jay Cooke, the titanic banker of his era, sold the bonds that helped the North win the Civil War. Cooke then backed transcontinental railways and didn't realize how much of a disaster it was. A financial crisis in Europe led investors to dump American railway bonds, and Jay Cooke and Co. went bankrupt, a shock to Wall Street on the scale of JPMorgan failing today. It set off what was called the Great Depression, until the actual Great Depression happened.

We now call it the Long Depression, still the longest recession in American history.

Michael Sincere is a freelance financial writer and the author of several books, including "Understanding Stocks," "Understanding Options" and "Help Your Child Build Wealth."

-Michael Sincere

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09-29-26 1245ET