Fitch cut the US’s 🇺🇸 sovereign credit grade one level from AAA to AA+ due to rising deficits and gov’t debt. Fitch’s action ech

Fitch cut the US’s 🇺🇸 sovereign credit grade one level from AAA to AA due to rising deficits and gov’t debt. Fitch’s action echoed one made in 2011 by S&P Global Ratings, which was never reversed. The federal deficit hit $ trillion for the first nine months of the current fiscal year, up some 170% y-o-y. The Treasury this week boosted its borrowing forecast for the current quarter to $1 trillion, well above the $733 billion it had predicted in May. US Fiscal Balance as % of Gross Value Added: The US deficit is close to historical wides, bigger than it’s ever been outside of a recession, and almost as wide as it was in the depths of the GFC. It’s the largest in the world in GDP terms, and it is currently heading in the wrong direction. This heaps more pressure on the gov’t debt-to-GDP level, already uncomfortably high at 112%. Tax revenues have seen almost their largest annual fall ever, in an economy that’s supposed to be growing at 2.4%. The total interest expense as a percentage of tax revenue is expected to rise sharply in the next year or two. Meanwhile, the Biden admin blames the previous Trump admin for the downgrade and Treasury Sec. J. Yellen says it is puzzling in light of the US’s economic strength. Melt-up scenario? US Treasury yields have risen every day this week. As the US 🇺🇸Treasury ramps up issuance, corporate borrowing and mortgage rates will soar as their respective UST reference rates rise. 10-year is up 23 bps 20-year is up 27 bps 30-year is up 30 bps Video source - Peter St. Onge Источник: The Paradigm Shift Channel ⏳