The story going into FOMC tomorrow: The Fed needs to lower rates because the US needs to roll over $8-9 trillion of debt in 2025.
Rolling over $8-9 trillion at 2025’s higher rates (e.g., 4-5% vs. 1-2% pre-2022) increases interest expenses, projected at $1.1 trillion for 2024
The story going into FOMC tomorrow: The Fed needs to lower rates because the US needs to roll over $8-9 trillion of debt in 2025. Rolling over $8-9 trillion at 2025’s higher rates (e.g., 4-5% vs. 1-2% pre-2022) increases interest expenses, projected at $1.1 trillion for 2024
With growing demands coming from pending debt roll-overs as the ‘maturity wall’ of debt termed out during the COVID emergency comes nearer, to say nothing of the 30% of US Treasury debt that Treasury Secretary Scott Bessent must refinance, the Fed will be forced to raise US liquidity levels.
US Fed QE Needs to Restart Fast
America, China, and the Death of the International Monetary Non-System - American Affairs Journal
Russell Napieramericanaffairsjournal.org
Putting Them Together
The United States is running larger fiscal deficits than most other countries, and its private sector has a higher proportion of long term fixed rate debt than most other countries. This means that in an interest rate hiking cycle, the United States has been rather de-sensitized to rising rates compared to other countries tha
... See moreLyn Alden • July 2024 Newsletter: Rates Insensitivity in the Downcycle
Let us give you one scenario that worries us. Congress shows no discipline and lets the budget run through a few more trillion in the next two years. The Fed has been successful in reflating the economy after it has embarked on even more aggressive quantitative easing. The bond markets get very nervous, and longer-term rates start to rise. What lit
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