DOGE DEFLATIONARY EFFECTS?
Bloomberg Economics estimates that if hashtag#DOGE attempts to go for savings of $600B/year, GDP could take a -2% hit by the end of this year, the unemployment rate could rise by nearly a percentage point, and CPI y/y could fall by nearly 0.9 percentage points. Source: Kevin Gordon @KevRGordon on X
🚨US budget deficit is SKYROCKETING: The US borrowed $838 billion in the first 4 months of Fiscal Year 2025, or $7 BILLION A DAY.
This is $306bn HIGHER than the corresponding period last year, according to CBO👇 Source: Global Markets Investor @GlobalMktObserv
It's the liquidity stupid...
Bitcoin $BTC is finally catching up with the drop of liquidity (with a 10 weeks lag). The good news is that Global M2 is accelerating again (but due to the lag risk assets should resume uptrend later on - all other things being equal of course...) Source: Bloomberg, Joe Consorti
This is truly a historic moment for the US economy.
US government interest expense has gone parabolic in the past few years It has now crossed a staggering $1.1 TRILLION At this rate, it is expected to reach $1.7 trillion by 2034 US debt is now becoming a major concern Source: Bravos Research
➡️ US Treasuries rose after the minutes from last month’s Federal Reserve meeting revealed policymakers discussed pausing or slowing the balance-sheet runoff ...
... until the government’s debt-ceiling drama is resolved. 👉 Various participants noted it may be appropriate to consider pausing or slowing balance sheet runoff until resolution of debt ceiling dynamics. 👉 Many participants noted after conclusion of balance sheet runoff it would be appropriate to structure asset purchases to move maturity composition closer to outstanding stock of Treasury debt. 👉 Reserves might decline quickly upon resolution of the debt limit and, at the current pace of balance sheet runoff, might potentially reach levels below those viewed by the Committee as appropriate. 👉 Fed survey respondents forecast balance sheet runoff process concluding by mid-2025, slightly later than previously expected. Source: Bloomberg, TalkMarkets
FOMC Minutes summary...
Source: Bloomberg, Mike Zaccardi
From the @FT article, “China’s holdings of US Treasuries fall to lowest level since 2009:”
“Analysts say the change partly reflects China’s desire to diversify its foreign reserves by buying assets such as gold. But they add that Beijing is seeking to disguise the true extent of its Treasury holdings by shifting them to custodian accounts registered elsewhere.” Source: FT, Mohamed El Erian
The composition of revenue for the U.S. government has evolved significantly over the decades.
Individual income % taxes represent the largest share (49% in 2024). Payroll taxes, which support programs like Social Security, contributes to 35% of federal revenue. Corporate income taxes have decreased as a percentage of total revenue, falling from 21% in 1964 to a mere 11% in 2024. This decline reflects shifts in tax policies and economic conditions. Other revenue sources, including excise taxes, tariffs, and miscellaneous receipts, remain relatively minor. Source: vizualitiks, CBO
