The U.S. national debt is approaching the point where bond traders see ‘mounting risk’ of a ‘vicious cycle,’ Moody’s top economist says

Policy optimists have long waved off concerns about a fiscal crisis in the U.S.: the moment at which the debt burden would grow so large that it would be either impossible to finance repayments or would require economic consequences.

The national debt burden now stands at more than $40 trillion, but the U.S. remains the largest economy on the planet—why worry? Borrowing advocates also suggest that interest rates are elevated across many markets; the U.S. isn’t alone in relatively higher rates and therefore does not stand out as a cause for concern.

But Moody’s top economist, Mark Zandi, believes he is seeing the first signs of discomfort in the Treasury market.

He also says that while many nations will have to wrangle with their borrowing burdens, the scale of the U.S. economy means its situation is “far and away the most important one.” Zandi isn’t an outlier in his outlook.

For many years, debt hawks (those concerned about the eye-watering levels of government borrowing) have warned that just because no crisis has happened yet , it doesn’t mean it won’t happen at all .

Their concern is not necessarily the value of public debt, but rather the country’s debt-to-GDP ratio.

This reveals the extent to which the government is borrowing to sustain necessary spending on services and operations, relative to its economic growth and, therefore, how comfortably it can repay its debts.

At the time of writing, the U.S. ratio stands at 126%.

The potential form of a fiscal crisis varies depending on which policymaker or economist you ask: Bridgewater Associates founder Ray Dalio believes America will suffer an economic “heart attack,” while Kent Smetters, professor of business economics and public policy at the University of Pennsylvania’s Wharton School, previously told Fortune he believes the U.S. will inflate its way out of a crisis.

Zandi wrote in a note late Sunday night that he is seeing the early signs of a spiral.

His warning comes as the U.S.

Treasury confirmed a $2 trillion deficit for the fiscal year ending in October, more than half of which was on interest payments alone.

“But arguably most significant is that global investors see all this and appear to be demanding a higher rate to compensate for the mounting risk,” Zandi wrote.

“The 10-year Treasury yield is up about a percentage point this year, among the biggest increases of any major economy, and the countries with the heaviest interest burdens have generally seen the biggest increases.