Surging US budget deficit fuels 5% yields

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The soaring US budget deficit, which surged to $2 trillion for the fiscal year ending in September, growing twice as fast as the economy itself, exemplifies the reasons behind the 5% yield rates. This deficit spike is primarily attributed to falling revenues, alongside increased spending on debt servicing, Social Security, and Medicare.

Deficit Doubling and The US Economy

The U.S. federal deficit doubled to $2.02 trillion, stoking fiscal worries and deepening partisan tensions in Washington. The surge, impacted by significant drops in tax receipts and inflationary pressures, threatens to ignite political disputes, especially with looming changes to tax policies by 2025.