Even if the Democrats win control of Congress in the U.S. midterms, they will not secure enough Senate seats to pass major fiscal or budgetary reforms over Republican opposition, meaning U.S. fiscal deficits will remain large and government debt will continue to increase, though broader market instability remains unlikely. U.S. and global bond markets have experienced a significant increase in yields over the past few weeks. Investor concerns center around higher energy-driven inflation, a hawkish shift in Federal Reserve monetary policy, savings being absorbed by sharply higher corporate AI investment, uncertainty about U.S. economic policy in terms of trade and investment, outsized fiscal deficits and debt sustainability, increased sensitivity of the U.S. treasuries market due to the greater role played by yield-sensitive investors like hedge funds, and an improving medium-term growth outlook due to the productivity-enhancing potential of AI investment.