japan and u.s. treasuries

Japan is selling U.S. treasuries. The chance that the U.S. will create more deficit spending is leading to a higher interest rate situation. This will make treasuries less valuable.

Investors have rallied around Wall Street. How quickly this will change the U.S. debt market is being witnessed by the selling of our debt. Usually, the selling takes place all at once, putting pressure on prices.

The Trump Administration wants tax cuts. There is also the risk of a trade war and this will likely put buying interest on hold. The cost of servicing U.S. debt will go up.

Debt is $19 Trillion or 105% of the GDP.

Our debt levels doubled between 2008 and 2013 from 35 percent of GDP to over 70 percent. With an already high debt, the government has less room to respond to future crises such as international events or economic downturns.

Unchecked debt growth could eventually lead to a fiscal crisis, as recently occurred across Europe. At that point, investors in U.S. debt will demand higher returns, driving up interest payments.

Japan is selling our debt.With this in place, the Fed probably will increase the interest rate in March.

This bloomberg.com article was a source for this post. Warning to Trump

Published by mikebertelsen

Global market, trade, and financial news. I keep up to date with what I assess is important.

%d bloggers like this: