With the clock ticking on America’s $36 trillion debt ceiling (which could be breached as soon as August), the national debt continues to climb, as it has for decades.
According to the Congressional Budget Office, the US public debt stood at 98% of GDP last year, and is set to surpass the WWII peak by 2029, hitting 119% by 2035. 🔴 What might be of particular concern to the number crunchers at Moody’s is not just the current level of federal debt, but how quickly it’s growing. Last year, the deficit was $1.8 trillion, more than 6% of GDP. The interest payments on debt alone were some $882 billion, greater than the defense and Medicare budgets. 😨 The latest tax cuts and spending push — or, as President Trump calls it, “the big, beautiful bill” — could add another ~$4 trillion to the federal deficit over the next decade, with Moody’s now projecting that the debt-to-GDP ratio could surge to 134% by 2035. In an interview with NBC yesterday, Treasury Secretary Scott Bessent shrugged off the downgrade, calling Moody’s a “lagging indicator.” But the markets took note, with the 30-year Treasury yield topping 5% this morning, a level last seen in late 2023.
S&P 500 ekes out sixth winning day as investors look past U.S. credit downgrade.
As shown below, US CDS (red line) barely moved on the news. And any way, investors are more focus on the green line (global trade policy uncertainty) than anything else. Source: zerohedge
The People’s Bank of China trimmed the 1-year loan prime rate to 3.0% from 3.1%, and the 5-year LPR to 3.5% from 3.6%.
A slew of state-backed commercial lenders moved to cut their deposit rates by as much as 25 basis points earlier Tuesday. As mentioned by Mo El Erian, the question remains: will this prolonged period of policy incrementalism reach a critical mass that fundamentally alters household sentiment and consumer behaviour? So far, it has failed to do so. Source: Bloomberg, CNBC
🚨Are investors too complacent?
The US equities put/call ratio fell from the highest level in 12 months to the 2nd-lowest level this year. Since the 2022 bear market, the put/call ratio has rarely been this low. Source: Global Markets Investor
#bitcoin
How it started... and how it is going
+0.64 PERCENTAGE POINTS!
This was the INCREASE in INFLATION over the last 18 days. If inflation is not controlled, interest rate cuts will be postponed, and this could have a strong impact on the markets.
Since 2016, S&P 500 has only had 2 red months during the May-July period 📈📈📈
Source: barchart
Yes, 2025 is likely to be a record year for EU equities funds inflows (according to BofA/EPFR, +$110bn inflow annualized, which will be the biggest since '15).
But despite all the US bashing, it could be a very strong year for US equities inflows as well. Indeed, US equities funds are on course for $416bn inflow, the 2nd biggest year ever... Source: BofA, EPFR
