12 October 2026 | Weekly Market Recap

JPMorgan Asset Management’s latest recap highlights the scale of the US fiscal challenge. The Congressional Budget Office estimates that the federal deficit reached approximately $1.993 trillion in FY2026, while total national debt has climbed above $40 trillion. The US is projected to reach its $41.1 trillion debt ceiling before the end of 2027. Rising interest costs and persistent government borrowing could keep long-term Treasury yields elevated, even if weaker economic data eventually support lower policy rates.

For dealmakers, the important distinction is between businesses that can fund investment from cash flow and those dependent on debt markets. A structurally higher long-term yield raises discount rates in valuations, increases acquisition financing costs and can make leveraged transactions harder to underwrite.

Market implications

• Rates: Large government borrowing needs may limit the decline in long-term yields.

• Valuations: Higher discount rates can pressure long-duration growth assets.

• Credit: Investors may demand stronger balance sheets and more conservative financing structures.

M&A / deal flow implications

• Cash-rich strategic buyers may retain an advantage over highly leveraged bidders.

• Buyout firms may need lower entry valuations or more equity to make returns work.

• Refinancing and balance-sheet advisory could become more important if debt costs remain elevated.

3 key takeaways

1. US fiscal sustainability remains a key risk for bond investors.

2. Higher long-term yields can persist even if growth slows.

3. Financing capacity—not just strategic rationale—will help determine which deals proceed.