At least one or two indicators are meaningfully stretched. Nothing to panic about, but worth reviewing your personal fixed vs. variable costs and making sure you're not overexposed to any single macro outcome.
What it is. How much of the government's income goes to paying interest on its debt. Rising = more tax dollars eaten by interest, less available for everything else.
Interpretation. Rising means the government's debt service is crowding out other spending. Commentators often flag >20% as the zone where pressure for monetization (Fed buying debt) builds, though there's no hard threshold.
Context. Trend matters more than level. A stable 18% is different from one that jumped from 10% in two years.
Historical context. US post-WWII baseline: 6-14%, most of the time. Briefly hit ~17-18% in the early 1980s during Volcker's rate hikes, then fell back as rates normalized. Japan has sustained 20-30%+ for decades without collapse (the BoJ owns ~half of JGBs). Italy in the 1990s: around 25% before joining the euro. Emerging markets like Argentina and Greece collapsed at lower ratios because they didn't control their own currency. The US has reserve-currency status as a real structural buffer — not a guarantee, but a meaningful one. 24%+ in the US is unprecedented in the post-gold-standard era at this scale.
What it is. Dollars bid per dollar of debt offered at the most recent 10-year Treasury auction. Higher = stronger demand for US debt.
Interpretation. Above ~2.5 is strong demand. Below ~2.0 is noticeably weaker, though outright failed auctions for US debt are historically rare.
Context. One auction is noisy. Watch the trend across several auctions and the 'tail' (gap between highest accepted yield and the pre-auction market yield).
Historical context. Post-2000 10Y auctions have averaged around 2.4-2.7. Dips below 2.0 happened a handful of times (2008 pre-crisis, 2009 supply shock, 2023 during rate-hike stress) without outright failure. The closest the US came to a 'failed' Treasury auction was 2009's 7Y auction with bid-to-cover of 2.07 — the world still bought. Compare to the UK's September 2022 'gilt crisis' where demand cratered and the Bank of England had to step in within 48 hours. That's the kind of event low bid-to-cover foreshadows.
What it is. How many ounces of gold the S&P 500 is worth. Falling = stocks are gaining less than gold, often interpreted as investors shifting to hard assets.
Interpretation. Rising = stocks outperforming gold (risk-on, confidence in financial assets). Falling = gold outperforming stocks, sometimes read as currency-debasement hedging.
Context. Over ~55 years this ratio has ranged from ~0.2 to ~5.8. Compare to its own history, not an absolute threshold.
Historical context. Major lows: 1980 around 0.2 (gold peak after 1970s inflation), 2011 around 0.6 (post-2008 QE era). Major highs: 2000 around 5.8 (dot-com peak), 2018 around 3.0. Ratio spent the 1990s above 2.0 during the 'Great Moderation' of stable low inflation. Historically, persistent moves below ~1.5 have coincided with periods of loose monetary policy, concerns about fiat currency, or commodity supercycles — not necessarily crisis, but a distinctive regime.
What it is. 10-year Treasury yield minus inflation. Positive = bond buyers earn above inflation. Negative = they lose purchasing power (financial repression).
Interpretation. Rising real yields are good for savers but tighten financial conditions (variable-rate debt gets more expensive). Persistently negative real yields erode cash and bond value.
Context. Check alongside inflation trend. A +1% real yield with falling inflation is very different from a +1% real yield with rising inflation.
Historical context. The 1940s-1950s US ran deeply negative real yields (sometimes -5% to -10%) to inflate away WWII debt. Real yields returned to +2-4% in the 1980s-90s. 2009-2021 saw negative real yields again during QE. When the tool shows persistently negative real yields alongside rising debt, that's the textbook 'financial repression' signature — interest rates held artificially below inflation to let the debt erode in real terms. That's historically how heavily-indebted countries get out from under. Not painful abruptly, but it makes cash and long bonds slow-bleed asset classes.
What it is. Share of outstanding federal debt that must be refinanced within a year. Higher = more exposure to rollover at whatever rate the market demands.
Interpretation. Rising means more of the debt stock has to be sold again soon. If rates are high when that happens, interest expense jumps fast. This is why maturity 'tilting' toward short-term matters.
Context. Changes slowly. Check the Monthly Statement of the Public Debt (MSPD) or Treasury quarterly refunding statements a few times a year. Update the config value by hand.
Historical context. Historical US norm: ~25-30%. The Treasury actively tilted toward short-term bills in 2023-2024 (reaching ~33%+ of outstanding), partly because the long end was expensive, partly because demand for bills was deep. This is a double-edged sword: cheaper now, but any sustained rate rise quickly flows into the interest expense line. Argentina and Turkey have run with very short average maturities and paid for it during rate shocks. UK typically runs long (~14 year average maturity); Japan similar. US used to run ~6 year average; has drifted shorter.
Heavily-indebted democracies historically manage the load through a mix of growth, austerity, inflation, or (for non-reserve countries) default. The first two are hard; default is essentially off the table for reserve currencies; so "inflate it away" — keep nominal rates below inflation while debt slowly erodes in real terms — tends to be the path of least political resistance. These four signals together tell you whether that playbook is visibly in motion.
These are prudent regardless of the composite score.