Gold Surges as IMF Warns of Global Debt Spillovers, Yields Hit Record Highs Amid Powell’s Dilemma

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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.

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.

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