Gold’s surge against inflation forecasts a looming market upheaval as IMF warns of global spillovers from escalating U.S. debt levels. With yields climbing and Powell signaling prolonged rate hikes, the Fed faces a daunting task amid inflationary pressures and fiscal dominance.
#Gold is breaking out versus #Inflation – A big shock is likely to be coming to the markets pic.twitter.com/D5gndm0GzU
— Northstar (@NorthstarCharts) April 17, 2024
US National debt has been rising by $1 trillion every 100 days.
The US debt-to-GDP ratio is at 124%, near the record of 126% in 2020.
The CBO estimates it will reach 131% in 2034.
Since 1800, 51 out of 52 countries with a ratio above 130% have defaultedt.co/LblUXGRjE8
— Global Markets Investor (@GlobalMktObserv) April 17, 2024
Good morning everyone! Yields are rising across the board:
– The 2-year yield surged to +4.95%
– The 30-year fixed-rate mortgage hit +7.13%
Meanwhile, Jerome Powell signaled yesterday "higher for longer" on interest rates
He's got an almost impossible job on his hands.… pic.twitter.com/b1DBgB52Bk
— Genevieve Roch-Decter, CFA (@GRDecter) April 17, 2024
— Global Markets Investor (@GlobalMktObserv) April 17, 2024
— Global Markets Investor (@GlobalMktObserv) April 17, 2024
For US Treasuries, the lack of a positive term premium in an era of fiscal dominance doesn’t make much sense. If inflation is to remain sticky in this deglobalized world, amid deficits and a Fed that isn’t willing to subsidize the Treasury’s endless supply of debt, the term… pic.twitter.com/kIV6kUgtCR
— Jurrien Timmer (@TimmerFidelity) April 17, 2024
This suggests that despite fiscal dominance and persistent deficits, the absence of a positive term premium for US Treasuries appears paradoxical. Given the potential for sticky inflation, reduced global integration, and the Federal Reserve’s reluctance to artificially suppress interest rates, there’s speculation that the term premium may rise as investors seek higher yields to offset perceived risks.