Climbing borrowing costs have become a headache for Treasury Secretary Scott Bessent. But the United States is not the only country grappling with the potentially destabilizing consequences of soaring government debt.
The revisions were the softer part of the report. May and June were revised down by a combined 103,000.
The success of his chairmanship may rest on an issue that sits outside the traditional purview of monetary policy: the nation’s ongoing fiscal deficits.
Data: Federal Reserve Bank of St. Louis, U.S. Treasury Department; Chart: Courtenay Brown/Axios The relentless run-up in Treasury yields reflects the globe's new economic reality: It takes a much richer reward to persuade investors to lend their money, especially for the longer run. Why it matters: Unlike previous bond sell-offs driven by inflation fears, this one reflects a world in which governments and companies are scrambling for enormous amounts of capital to finance wide fiscal deficits, the AI infrastructure buildout and more. - The competition is forcing borrowers to pay more. - The good news is that inflation expectations appear to be in check, so the moves don't necessarily compel any immediate reaction from the Federal…
Wholesale business inflation was over 6% in May and overall consumer inflation was over 4%, stemming from the economic pressure of the war in Iran.
The global economy faces the types of massive imbalances that preceded previous crises — despite important differences — and it's not yet clear how this debt cycle will end. Why it matters: The last four decades of economic turbulence trace back to a similar underlying issue, that the world's biggest economies are chronically out of sync, former top International Monetary Fund official Gita Gopinath argued in a buzzy speech Monday evening. - She spoke at the Atlanta Federal Reserve Bank's annual financial markets conference in Amelia Island, Florida. - Gopinath pointed to three major eras of global imbalances: the U.S.-Japan tensions of the 1980s, which culminated in the Plaza Accord ; the buildup to the 2008 financial crisis; and…
Kevin Warsh hasn't even been sworn in as leader of the Federal Reserve yet, and his first great test has already arrived. The big picture: Global bond markets are sending borrowing costs markedly higher in this era of energy supply disruptions, AI-fueled demand for capital and massive fiscal deficits. - The yield on 30-year U.S. Treasury bonds has surged to 5.11%, its highest level since 2007. The rate was 4.63% at the end of February. - It sets up an environment where the Fed may well need to prevent inflation expectations — as reflected in bond traders' bets — from coming unmoored. - It's a paradox of monetary policy: Sometimes, the only solution for higher long-term interest rates is higher short-term interest rates. Zoom out:…
America can’t tackle big problems if the “I got mine” mentality prevails. The post To Reduce the Debt, Revive the Spirit of Sacrifice appeared first on The American Conservative .
America’s debt topped 100 percent of our national GDP last month, marking a grim milestone for the nation. “We’re headed toward uncharted territory,” Marc Goldwein, senior vice president of the Committee for a Responsible Federal Budget, told the Wall Street Journal . “There’s no magic of 100 percent vs. 99 percent, but it’s a scary place to be.” The disturbing news wasn’t greeted with much concern. Upon reflection, that’s not very surprising. The debt has been increasing exponentially for years without the average America feeling the effects. People simply don’t care about it much anymore. With the exception of some libertarians in Congress and at think tanks, it’s been a long time since even conservatives…Open
Washington quickly brushed off a startling milestone in a mounting problem.
Why does the public seem unbothered by the national debt?