Latest news with #Economists
Yahoo
a day ago
- Business
- Yahoo
Soaring U.S. debt doesn't just put America at risk. It could trigger contagion across global markets, IIF warns
Treasury yields spiked recently amid mounting fears that investor demand for U.S. debt is waning just as supply is taking off, with a budget bill in Congress expected to add trillions to the deficit. But the effects of rising debt won't be limited to the American economy, according to the Institute of International Finance. It's not just Americans and the federal government poised to feel the effects of U.S. debt, which has exploded in recent years and could get even worse soon. Borrowing costs in certain countries often move in tandem, meaning volatility in Treasury bonds will create ripples in other debt, according to a recent report from the Institute of International Finance. 'The implications of rising U.S. debt levels are not limited to the domestic economy; they are also likely to trigger significant contagion and spillover effects across global bond markets,' IIF economists wrote on May 22. 'A potential increase in volatility in U.S. Treasury markets—driven by growing market attention to supply-demand dynamics and the composition of borrowing needed to finance anticipated large funding requirements—is likely to transmit to other jurisdictions, though the magnitude of the impact will vary.' U.S. debt has been top of mind lately as a Republican budget bill moving through Congress is expected to add trillions to the budget deficit in the coming years. That's jolted Treasury yields, and weak demand at a 20-year bond auction earlier this month exacerbated fears that investors won't have an appetite big enough for all the red ink coming soon. In fact, Deutsche Bank warned there's a buyer's strike among foreign investors, who are no longer willing to finance massive U.S. fiscal and trade deficits. IIF pointed out that there's a long-standing pattern of sovereign yields moving together, especially in the U.S., U.K., Germany and France, 'reflecting the deep interconnections among these economies through trade and capital markets.' Yield sensitivity is more limited in Japan and other some major emerging markets, according to IIF, but their interconnections were on display recently and showed that volatility can flow in both directions. A weak auction of 40-year Japanese government bonds on Wednesday sent JGB yields higher—and U.S. Treasury rates as well. Days earlier, George Saravelos, head of FX research at Deutsche Bank, predicted higher yields for Japanese assets would make them a more attractive alternative for local investors, encouraging further divestment from the U.S. To be sure, the vastness of the Treasury market and its deep liquidity mean that buyers and sellers will still be drawn to the U.S., but that immense size also crowds out others. IIF said in its report that there are signs of more sensitivity to rising U.S. debt levels among emerging markets, due in part to a shrinking pool of international capital available to sovereign EM borrowers. 'With the U.S. and Euro Area accounting for over 60% of global cross-border debt portfolios, emerging markets and developing countries represent less than 7%—with many individual countries accounting for only a fraction of a percent,' the report said. This story was originally featured on
CNN
3 days ago
- Business
- CNN
Americans pulled back on their spending in April amid tariff rollout
American consumers reined in their spending in April following a tariff-fueled buying binge the month before, according to new data released Friday that also showed inflation cooled off again. Friday's report from the Commerce Department showed that consumer spending rose 0.2% last month, a weaker-than-anticipated reading but a notable retreat from March's 0.7% surge when Americans front-loaded purchases — notably new cars — ahead of potential price increases from President Donald Trump's tariffs. The latest data also showed inflation moving closer to the Federal Reserve's target of 2%, almost where it was before the tariffs rollout. The Personal Consumption Expenditures price index was 2.1% for the 12 months ended in April, a slowdown from the 2.3% annual gain in March. On a monthly basis, prices rose 0.1%, a slight acceleration after holding steady in March. Economists were expecting the PCE price index to rise 0.2% from March and to ease to an annual rate of 2.2%, and for spending to slow to 0.4%, according to FactSet. This story is developing and will be updated.
CNN
3 days ago
- Business
- CNN
Americans pulled back on their spending in April amid tariff rollout
American consumers reined in their spending in April following a tariff-fueled buying binge the month before, according to new data released Friday that also showed inflation cooled off again. Friday's report from the Commerce Department showed that consumer spending rose 0.2% last month, a weaker-than-anticipated reading but a notable retreat from March's 0.7% surge when Americans front-loaded purchases — notably new cars — ahead of potential price increases from President Donald Trump's tariffs. The latest data also showed inflation moving closer to the Federal Reserve's target of 2%, almost where it was before the tariffs rollout. The Personal Consumption Expenditures price index was 2.1% for the 12 months ended in April, a slowdown from the 2.3% annual gain in March. On a monthly basis, prices rose 0.1%, a slight acceleration after holding steady in March. Economists were expecting the PCE price index to rise 0.2% from March and to ease to an annual rate of 2.2%, and for spending to slow to 0.4%, according to FactSet. This story is developing and will be updated.
Bloomberg
5 days ago
- Business
- Bloomberg
China Deflation Worry Deepens Among Economists After Trade Truce
Economists expect deflationary pressure to get worse in China, even as they improve forecasts for growth and exports this year after a truce in the trade war with the US. Consumer prices will likely increase by just 0.3% in 2025 from a year ago, the lowest projection since Bloomberg began polling the question in 2023 and down from the 0.4% predicted in April. China has seen economy-wide prices falling for two straight years, with consumer inflation below zero for the past three months.
Bloomberg
23-05-2025
- Business
- Bloomberg
Ghana Keeps Rates Steady With Cedi Rally Set to Tame Inflation
Ghana's central bank kept its key interest rate on hold to maintain downward pressure on inflation, which is expected to get a boost from the West African nation's world-beating currency. The monetary policy committee maintained the policy rate at 28%, Governor Johnson Asiama told reporters on Friday in the capital, Accra. All three economists in a Bloomberg survey correctly predicted the decision.
