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  • How to Invest When Governments Keep Swiping the National Credit Card

How to Invest When Governments Keep Swiping the National Credit Card

Author

Noah Zelvis
January 28, 2026

Global growth right now is being powered by governments spending like they found a rewards card with no limit.

That can keep the party going for a while, but it also nudges bond yields higher, makes markets jumpy, and turns safe and boring into spicy.

Your move is not to predict the next headline, it is to own businesses that get paid when public spending ramps up and when rates wobble.

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The big idea is simple: when private demand is soft and voters hate pain, governments step in and spend.

That spending props up growth and jobs in the short run, but it can get risky when debt loads are already heavy and interest costs are rising.

Here is what matters for you.

More stimulus can mean higher yields, even if the economy looks fine.
When governments issue more debt to fund spending, bond markets often demand a higher return.

That pushes long-term yields up, which filters into mortgages, corporate borrowing, and your portfolio’s mood swings.

Japan is a good reminder of how fast this can show up: big spending plans can collide with higher long-term yields and investor nerves.

The global debt tab is getting chunky.
The IMF has flagged that global public debt is on track to rise further and remain elevated, which raises the odds that interest costs become a bigger political and market problem over time.

Defense and resilience spending is becoming the default setting.
This is not only about stimulus checks. It is also about rearmament, infrastructure, energy security, and aging populations.

Germany’s budget planning has highlighted defense as a major focus, and that theme is not limited to Europe.

The real risk is not tomorrow morning, it is the slow squeeze.
When interest payments climb, budgets get less flexible. Eventually, somebody has to blink: higher taxes, less spending, or a market tantrum that forces discipline.

You do not need to time that moment. You just need to avoid building a portfolio that only works if rates fall forever and borrowing stays cheap forever.

So the playbook is straightforward.

  • Own the picks and shovels for public spending. If governments are the growth engine, you want companies that win contracts and recurring work from that engine.

  • Do not rely on long-duration hope. When yields rise, the stuff priced for perfection tends to get punched first.

  • Monetize the wobble. Big deficits plus uncertain rates usually create more issuance, more hedging, and more trading activity. Some businesses get paid when everyone else is arguing.

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Actionable Stuff

  • Build a two-lane portfolio. A core of steady cash generators, plus a sleeve of government-spend beneficiaries.

  • Buy in thirds. One tranche now, one on the next yield spike freakout, one after the next big fiscal headline.

  • Keep dry powder. T-bills and cash are optionality when yields jump.

  • Be selective with rate-sensitive names. Housing and speculative growth can still work, but size positions like you expect volatility.

  • Look for contract visibility. You want businesses that can plan revenue without needing consumers to feel brave.

Trivia: Why do many countries keep low-value coins even when they’re unpopular?

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Top Picks

Parsons (PSN)

Parsons is the kind of company that pops up when governments decide they need to build things and protect things at the same time.

It works across defense-related services, cyber, and infrastructure projects that usually do not get canceled just because markets get cranky for a week.

In a deficit-fueled world where rearmament and modernization keep climbing the priority list, that is a nice place to camp out.

What makes it fit right now is the rhythm of the business. A lot of this work is multi-year, which means you are not waking up every quarter praying for perfect consumer vibes.

If interest rates stay higher for longer, governments may shuffle spending around the edges, but defense and critical infrastructure tend to keep getting fed.

The main risk is that these names can run when the spending-cycle narrative gets hot, then cool off when headlines change.

Your edge is staging buys and letting the backlog do its job.

KBR (KBR)

KBR is another gets-paid-when-governments-spend play, with exposure to defense, intelligence support, and large, complex projects.

If the world leans into national security, logistics, and strategic capabilities, KBR often ends up involved. It is not flashy, but it is useful, and useful tends to stay employed.

The appeal for this macro setup is diversification inside the contract engine. You are not tying your outcome to one program or one customer mood swing.

You are leaning into the reality that governments are spending across multiple lanes, and that spending tends to persist even when investors are nervous about deficits.

The risk is the usual government-contracting stuff: timelines can be lumpy, and sentiment can swing on a single policy headline.

That is why you buy it for resilience, not for a straight-line chart.

Tradeweb (TW)

If you think governments will keep issuing debt and markets will keep debating rates, then trading and hedging do not disappear. They usually increase.

Tradeweb runs electronic marketplaces where bonds and rate products trade, which means it can benefit when everyone is repositioning because yields moved, a new spending package hit the tape, or investors suddenly care about deficits again.

This is the sneaky angle: you do not have to guess whether yields go up or down. You just need markets to keep moving and participants to keep trading.

Debt-heavy policy cycles are very good at creating motion. The main risk is a volatility drought where everything gets oddly calm and volumes cool.

With fiscal noise and rate uncertainty, calm usually does not last long.

Sterling Infrastructure (STRL)

Sterling is a practical way to play the governments-will-spend-on-real-stuff theme without owning a mega-cap giant.

It is tied to infrastructure-type work and construction services that tend to show up when money is flowing into rebuilding, expanding, and upgrading.

When politicians start pushing ports, roads, and resilience, somebody still has to do the work.

Why it fits this debt-driven growth setup is that infrastructure is one of the easiest kinds of spending to sell politically. It creates jobs, looks productive, and can be framed as competitiveness.

The risk is cyclicality and project timing. This is not a subscription business, and it can get clipped if projects are delayed or financing conditions tighten hard.

That is why you treat it like a spice, not the whole meal, and you buy on pullbacks when the market gets dramatic.

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Bottom Line: If the world keeps leaning on deficits to keep growth moving, you do not need to panic, you need a plan.

Own contractors and service firms that benefit from public investment, add a toll booth that gets paid when rates and bonds reprice, and keep enough dry powder to take advantage of the inevitable freakouts.

The goal is to let the spending habit work for you, without letting the interest bill ruin your mood.

That’s it for today’s edition—thanks for reading! Reply to this email with any feedback or let me know which macro trends or markets you’d like me to cover next.

Best Regards,
—Noah Zelvis
Macro Notes