US credit default swap (CDS) prices have risen due to concerns about the risk associated with US debt. The spreads on 5-year CDSs have widened, indicating increased caution among investors.

The change in CDS prices coincides with a rise in US Treasury yields, driven by speculation about a potential second term for Donald Trump. Despite a recent slowdown in inflation, the prospect of further fiscal stimulus raises concerns about the US deficit trajectory. Officials from the Treasury and the Federal Reserve have warned about limited fiscal leeway after years of heavy stimulus.

While the Biden administration's measures support certain sectors, the current economic environment suggests that additional stimulus could be risky, especially with inflation above target levels.