【Countdown to the U.S. Debt Storm: A Deadly Game with Three Blades Hanging Overhead】
Brothers, the U.S. debt market is currently turbulent, with three nuclear-level crises overlapping. I dug through data across the internet and found several critical signals:
First Blade: June U.S. Debt Nuclear Explosion Day
In June, $6.5 trillion of U.S. debt will mature, accounting for 70% of the annual total, which is equivalent to 22% of the U.S. GDP that must be repaid within 30 days. What's worse is that 69% of this is ultra-short-term bonds, and Wall Street is like ants on a hot pot—unable to borrow new funds to repay old debts, the Federal Reserve may have to restart the printing press to save the day.
Second Blade: Corporate Debt's Grim Reaper
During the pandemic, companies issued $2.8 trillion in low-interest debt, and this year's maturing amount is four times the usual. These companies either have to refinance at high prices (with rates exceeding 7%) or face collective defaults, resembling the eve of the 2008 subprime crisis. Hedge funds have already fled, with a single-day sell-off of $80 billion in corporate bonds last week, and the liquidity exhaustion alarm has been sounded!
Third Blade: Debt Ceiling Werewolf Game
In August, the U.S. will once again stage the extreme tug-of-war over raising the debt ceiling. Even if Congress approves it, the Treasury will inevitably flood the market with bonds, draining market liquidity. Referring to the 2023 debt stalemate, this could trigger an interbank interest rate spike to 10% in a “Liquidity Crisis 2.0.”
Deadly Catalyst: Credit Collapse
Moody's downgraded the last AAA rating for the U.S. last week, directly triggering a triple whammy in stocks, bonds, and currencies—30-year U.S. debt rates broke 5%, the dollar index plummeted, and gold surged to $3,250. Even scarier is that major buyers like China and Japan are continuously reducing their holdings, with foreign ownership of U.S. debt crashing from 60% to 30%, and the takers are running out!
Now keep an eye on two indicators:
Credit Spread (the spread between corporate and government bond yields): A breakthrough of 250 basis points is a signal of collapse.
Federal Reserve Toolbox: Once QE is announced to restart, it’s an admission that they can't hold on any longer.
This U.S. debt storm is closer than imagined. Brothers with U.S. dollars are advised to allocate 5% in gold for hedging. Remember: when Buffett holds $300 billion in short-term U.S. debt and waits, ordinary people must not be stubborn!
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