US Economic News

[specuvestor]

The argument that US cannot be constant deficit has been raised since Breton Wood. Nobody else can spend what US deficit indicates simply because USD is massively ⅔ dominant in reserve currency and >90% FX involved USD which will hold up the demand. Until people lose faith in USD or trade volume % in USD goes down this worry will continue with no consequence like the sun eventually engulfing earth.

That’s why Russia was leading in asking nations to sell US securities during GFC to undermine the faith, which China didn’t follow. Will Petro$ breakdown will be the next thing to watch.

[Behappyalways]

On the issue that Fed cannot raise the interest rates too high else the US will not be able to service their debts ...


https://mobile.twitter.com/biancoresearc...8366746624



Used-Car Prices Reaccelerate With Biggest February Gain Since 2009
https://www.zerohedge.com/markets/used-c...-gain-2009

[Big Toe]

This debt ceiling is quite interesting. Neither party is willing to make meaningful cuts on spending/increase taxes to upset the populous, which means kicking the can down the road. As it is a long road, they can probably kick it for a long time. The average interest rate paid on debt is still very very low due to a decade of low interest rates( hikes are only a recent thing). Interest on debt is just under 7% of US budget(about the size of SG GDP) but certainly will rise. In the longer term, as there is no way the economy can grow fast enough to fund their spending habits, it would mean tax hikes and budget cuts in the foreseeable future. It is almost a certainty that well-to-do individuals and companies will be the ones bearing most of the hikes.

Akin to one very wealthy man with great/constant income but lacking discipline to lower his debt and curb his free-spending ways.

[brattzz]

the whole world is in this debt fueled growth... with massive printing among the biggest economies, there can be no stoppages of this... US can try, but there is simply no end to this... US's debts will continue to spike,

rest of the world economies will follow US's lead, and continue to expand their debts...

We see no reset in sight! :O

[CY09]

https://www.cnbc.com/2023/03/10/silicon-...pened.html

A bank run has resulted in the bank selling off its US treasury bonds at realised losses due to the constant Fed Fund Hikes. The next question is how much of each bank's porfoilo are sittng on unrealised losses due to the Fed rate hikes, should there be a move to withdraw deposits, banks may be forced to realised losses, pushing them to negative equity

[weijian]

https://www.cnbc.com/2023/03/10/silicon-...pened.html

A bank run has resulted in the bank selling off its US treasury bonds at realised losses due to the constant Fed Fund Hikes. The next question is how much of each bank's porfoilo are sittng on unrealised losses due to the Fed rate hikes, should there be a move to withdraw deposits, banks may be forced to realised losses, pushing them to negative equity

It's probably more nuanced than that. I thought this article has a good summary (at least for me who is an outsider to all the workings of the US financial system).

But the demise of SVB does largely explain why certain companies that manages assets (eg. Great Eastern) hasn't been doing very well in terms of stock price and looking really cheap.

The Demise of Silicon Valley Bank


Silicon Valley Bank was never subjected to the Federal Reserve’s LCR requirement – even as the 16th largest bank in America, it was deemed too small. It’s a shame. Regulation is not a panacea since banks are paid to take risk

https://www.netinterest.co/p/the-demise-...alley-bank

[weijian]

An healthy sign that the Authorities come in to backstop and pre-empt contagion.

In theory, your deposits are only insured up to XXX by the FDIC but in practice, all your deposits are insured.

US says all SVB deposits safe, creates new backstop for banks

SVB depositors “will have access to all of their money starting Monday, Mar 13”, the government said in a statement, adding that taxpayers won’t be responsible for any losses associated with SVB’s resolution.

In a sign that the situation had worsened, the government also said Signature Bank was closed by New York state financial regulators on Sunday and all depositors there will also have access to their money on Monday.

https://www.businesstimes.com.sg/interna...stop-banks

[Behappyalways]

Illiquidity and not QE. As banks tighten, economic activities will further slow down....


As for the Banks - this will actually stop the Banks from lending and they will tighten their lending standards, so that they can increase liquidity organically from loans that get repaid. Goldman Sachs forecasts lending standards will tighten substantially after this.

https://www.zerohedge.com/markets/fed-ba...ndow-surge

https://www.ayeshatariq.com/p/the-feds-s...-window-is

[Behappyalways]

Which Countries Hold The Most US Debt?
https://www.zerohedge.com/markets/which-...st-us-debt