Rising US Government Bond Yields š
The trade war fears have cooled, but rising US government bond yields are still causing major headaches for President Trump.
Hereās the deal:
- The US needs to refinance $9 trillion in maturing government bonds this year, about 25% of total federal debt.
- A lot of this debt was issued at a low 2.7% interest rate, but now it might need to be refinanced at 4.45%. That means interest costs could double from $245 billion to $500 billion annually. Yikes. šø
Trump wants rates to fall, but hereās the catch:
- Trade war fears? Countries sell US bonds, causing rates to rise.
- Trade wars gone? Investors dump bonds to buy stocks, and rates still rise.
- Nothing happening? The FED is still keeping rates high, refusing to lower them.
The bottom line: The FED holds the keys to solving this crisis, but will they act? š§
