10172019What's Hot:

Trump ran on reducing the debt — now he’s sending it through the roof

The White House got a taste of just how problematic this debt situation could get this week. Investors are concerned about all the additional borrowing and the likelihood of higher inflation, which is why the interest rates on U.S. government bonds hit the highest level since 2014. That, in turn, partly drove the worst weekly sell-off in the stock market in two years.

The belief in Washington and on Wall Street has long been that the U.S. government could just keep issuing debt because people around the world are eager to buy up this safe-haven asset. But there may be a limit to how much the market wants, especially if inflation starts rising and investors prefer to ditch bonds for higher-returning stocks.

[…]

The Committee for a Responsible Federal Budget predicts the U.S. deficit will hit $ 1 trillion by 2019 and stay there for a while. The latest borrowing figure — $ 955 billion — released this week was determined from a survey of bond market participants, who tend to be even faster to react to the changing policy landscape and change their forecasts.

Source: Salon: in-depth news, politics, business, technology & culture > Politics

comments powered by HyperComments

More on the topic