Latest news with #FiscalPolicy
Bloomberg
29-05-2025
- Business
- Bloomberg
Goldman's Waldron Says Bond Traders Fear Debt More Than Tariffs
Bond traders are becoming increasingly spooked by mounting levels of US government debt — and it's now a concern that holds more risk than tariffs, according to Goldman Sachs Group Inc. 's president. 'While all the attention was on tariffs, I think the attention rightly is shifting — certainly in the bond market — to the US budget debate and the fiscal picture, which I would characterize as somewhat concerning,' John Waldron said at a Bernstein conference Thursday. 'I think the big risk on the macro right now is actually not so much tariffs.'
South China Morning Post
19-05-2025
- Business
- South China Morning Post
Moody's downgrade, US debt fears unsettle markets, reviving mini ‘sell America' trade
Investors faced yet another bumpy start to the trading week with US assets coming under fresh pressure, although it's mounting concern over American debt rather than tariffs generating volatility this time. Longer-dated Treasuries dipped with US equity futures and the dollar in early Asia trading after Moody's Ratings announced on Friday evening it was stripping the American government of its top credit rating, dropping the country to Aa1 from AAA. The company, which trailed rivals, blamed successive presidents and congressional lawmakers for a ballooning budget deficit it said showed little sign of narrowing. The downgrade risks reinforcing Wall Street's growing worries over the US sovereign bond market as Capitol Hill debates even more unfunded tax cuts and the economy looks set to slow as President Donald Trump upends long-established commercial partnerships and renegotiate trade deals. On Monday, 10-year Treasury yields were little changed around 4.48 per cent, having climbed in late Friday trading, and their 30-year equivalents edged up to 4.96 per cent. A 10-point increase in the 30-year yield would be enough to lift it above 5 per cent to the highest since November 2023 and closer to that year's peak, when rates reached levels unseen since mid-2007. A trader on the floor of the New York Stock Exchange. Photo: EPA-EFE 'A Treasury downgrade is unsurprising amid unrelenting unfunded fiscal largesse that is only set to accelerate,' said Max Gokhman, deputy chief investment officer at Franklin Templeton Investment Solutions. 'Debt servicing costs will continue creeping higher as large investors, both sovereign and institutional, start gradually swapping Treasuries for other safe haven assets. This, unfortunately, can create a dangerous bear steepener spiral for US yields, further downward pressure on the US dollar, and reduce the attractiveness of US equities.'
Reuters
12-05-2025
- Business
- Reuters
Japan's Ishiba open to more stimulus but rules out sales tax cut
TOKYO, May 12 (Reuters) - Japanese Prime Minister Shigeru Ishiba said on Monday the government was ready to take further steps to cushion the economic blow from higher U.S. tariffs, but signalled caution on cutting the country's consumption tax rate. Opposition and some ruling party lawmakers have called on the government to cut Japan's consumption tax rate, set at 10% except for food items that are charged 8%, to help households cope with the rising cost of living. Speaking in parliament, Ishiba said the government "won't hesitate to take additional measures" to ease the pain on the economy from higher U.S. tariffs. But he said any steps must be targeted to households hardest hit rather than those covering the broad population, suggesting that a cut to Japan's consumption tax rate was unlikely. "It's important to reach out to people hardest hit," rather than taking blanket measures, Ishiba told parliament when asked by an opposition lawmaker whether the government could consider cutting the consumption tax rate for food items. While some countries have resorted to tax cuts focusing on food items, Japan already has a fairly low tax rate, a rapidly ageing population and a dire fiscal state, Ishiba said. "It's easy to talk about cutting tax. But it's irresponsible not to also discuss more difficult issues" such as how to pay for Japan's rising social welfare and pension costs, he said. Japan's public debt, at double the size of its economy, is the largest among major countries due to decades of heavy spending including for social welfare costs of a rapidly ageing population. The cost of funding the huge public debt is expected to rise as the Bank of Japan normalises monetary policy by tapering its bond buying and raising short-term interest rates. Super-long bond yields rose to a more than two-decade high this month due in part to investors' concern that Japan's fiscal state may worsen further, as talk of tax cuts among politicians gather steam ahead of an upper house election slated for July.
