The US government posted a deficit of $ 345 billion in August, with receipts of $ 344 billion overshadowed by $ 689 billion in spending. The largest spending was a medication at $ 141 billion and social security at $ 134 billion, but what stands out is a net interest at $ 93 billion, now the third expense. This highlights the increasing pressure that the increase in borrowing costs required on federal finances.
The federal reserve should reduce the rates of 25 base points in September, but history suggests that it will not be simple. In September 2024, the Fed attenuated the policy of 100 SBPS only to see long -term yields increase sharply. The 30 -year -old treasure went from 3.9% to 5% and is 4.7% today.
With recent data pointing to an acceleration of inflation, the risk is that reduction rates can supply additional price pressures. This would oblige higher yields, increase debt service costs and potentially deepen the budget hole, creating a difficult backdrop for decision -makers and markets.
The markets react decisively. Gold has reached new record heights, just below $ 3,670 per ounce, marking a gain of almost 40%. Bitcoin is also gaining ground, climbing above $ 115,000 while investors are looking for alternatives in an environment where debt sustainability becomes greater concern.
