As can be seen visually, the correlation between the economic composite and rates is high. The long-term trend lines suggest normalization of the economy and rates at 2.5%, assuming no recession.
However, Jones’s primary argument for not owning debt has nothing to do with the actual drivers of interest rates.
Debt and Interest Rates: A Complex, Nonlinear Relationship
Paul Tudor Jones argues that higher debt will increase interest rates and create unsustainable borrowing costs. In the interview, he repeated the “debt bears” mantra: the U.S. will eventually go bankrupt. However, his concerns overlook several critical economic realities.