Published: August 4, 2023 at 5:55 AM ET
While the investment community is still puzzled by Fitch Ratings’ decision to downgrade the U.S. debt rating, here’s a startling statistic. U.S. government debt will grow by $5.2 billion every day over the next decade.
That’s according to the latest letter from Bank of America strategist Michael Hartnett, who cited the Congressional Budget Office’s projections to derive the numbers.
the important thing is,…
While the investment community is still puzzled by Fitch Ratings’ decision to downgrade the U.S. debt rating, here’s a startling statistic. U.S. government debt will grow by $5.2 billion every day over the next decade.
That’s according to the latest letter from Bank of America strategist Michael Hartnett, who cited the Congressional Budget Office’s projections to derive the numbers.
Importantly, debt is expected to grow at a much faster pace than the economy as a whole. CBO figures show that national debt will reach 118.9% of GDP by 2033, up from 98.2% this year.
Hartnett said the central bank is still working to bail out Wall Street, and the government is also working hard to bail out Main Street. “If the next recession triggers fiscal policy panic and government default risks rise to unprecedented heights, the ultimate destination for policy will be yield curve control across the G7,” he said.
It should be noted that Japan, the only major economy with yield curve control, is taking small steps to get out of it. The United States had yield curve control during World War IIand this is a policy recently being considered by Federal Reserve officials.
Commodities have been the best performing assets since the May 31 debt ceiling resolution, Hartnett said. The main driver is the lack of recession, but supply factors such as US oil inventories, lowest since 1985, India’s rice export ban, China’s germanium and gallium export restrictions, Russia and Saudi Arabia’s oil supply dynamics, military, etc. It also supports combinations. A coup in uranium-rich Niger.
His analysis of Bank of America’s retail clients showed that over the past two weeks, fixed income inflows were the highest since October 2022 and equities outflows were the second in a row, putting retail clients in risk-off mode. It is said that These clients buy investment grade bonds, Japanese stocks and volatility products, and sell growth stocks, bank loans, financials and high-tech exchange-traded funds.
