Latest news with #USdeficit
Telegraph
3 days ago
- Business
- Telegraph
US will never default on its debt, claims Trump's Treasury Secretary
The US will never default on its debts, Donald Trump's Treasury Secretary has claimed, as he sought to downplay growing concerns over the state of the country's public finances. Scott Bessent told CBS news on Sunday that the US was 'on the warning track' but insisted it would not run out of cash despite approaching the so-called debt ceiling – the legal limit that the US government is permitted to borrow. He said: 'I will say the United States of America is never going to default. That is never going to happen. We are on the warning track and we will never hit the wall.' Economists have warned that Donald Trump's 'big, beautiful' spending bill will add trillions to the US's $37 trillion (£27.4 trillion) federal deficit over the next decade. The bill, which was approved by the US's House of Representatives last month, proposes raising the US debt ceiling by $4 trillion. It promises increased spending on the US military and a clampdown on illegal immigration alongside cuts to food aid, clean energy tax credits and Medicare, America's healthcare programme for poorer households. The US has already been downgraded by three major credit rating agencies in part owing to concerns over Mr Trump's policies and slowing economic growth across the Atlantic. In early May, Mr Bessent said there was a 'reasonable probability' that the US could run out of money by August without lifting the debt ceiling. 'We're going to bring the deficit down slowly' Mr Bessent's comments come after Jamie Dimon, the chief executive of JPMorgan, warned last Friday that Donald Trump's financial plans could 'crack' the American bond market. Investors have become increasingly worried over the impact of Mr Trump's borrowing plans on US Treasuries. Mr Dimon said: 'I just don't know if it's going to be a crisis in six months or six years, and I'm hoping that we change both the trajectory of the debt and the ability of market makers to make markets.' Mr Bessent hit back at Mr Dimon, saying: 'I've known Jamie for a long time, and for his entire career he's made predictions like this. Fortunately none of them have come true. That's why he's a great banker. He tries to look around the corner. 'We are going to bring the deficit down slowly. This has been a long process, so the goal is to bring it down over the next four years.' He argued that the US was taking in a 'substantial tariff income' that could net the US government as much as $2 trillion, and pointed to plans for a clampdown on prescription drug prices. He said: '[The] president has a prescription drug plan with the pharmaceutical companies that could substantially push down costs for prescription drugs, and that could be another trillion.' Beijing had violated a truce on tariffs agreed in May.
Yahoo
3 days ago
- Business
- Yahoo
US will never default on its debt, claims Trump's Treasury Secretary
The US will never default on its debts, Donald Trump's Treasury Secretary has claimed, as he sought to downplay growing concerns over the state of the country's public finances. Scott Bessent told CBS news on Sunday that the US was 'on the warning track' but insisted it would not run out of cash despite approaching the so-called debt ceiling – the legal limit that the US government is permitted to borrow. He said: 'I will say the United States of America is never going to default. That is never going to happen. We are on the warning track and we will never hit the wall.' Economists have warned that Donald Trump's 'big, beautiful' spending bill will add trillions to the US's $37 trillion (£27.4 trillion) federal deficit over the next decade. The bill, which was approved by the US's House of Representatives last month, proposes raising the US debt ceiling to $4 trillion. It promises increased spending on the US military and a clampdown on illegal immigration alongside cuts to food aid, clean energy tax credits and Medicare, America's healthcare programme for poorer households. The US has already been downgraded by three major credit rating agencies in part owing to concerns over Mr Trump's policies and slowing economic growth across the Atlantic. In early May, Mr Bessent said there was a 'reasonable probability' that the US could run out of money by August without lifting the debt ceiling. Mr Bessent's comments come after Jamie Dimon, the chief executive of JPMorgan, warned last Friday that Donald Trump's financial plans could 'crack' the American bond market. Investors have become increasingly worried over the impact of Mr Trump's borrowing plans on US Treasuries. Mr Dimon said: 'I just don't know if it's going to be a crisis in six months or six years, and I'm hoping that we change both the trajectory of the debt and the ability of market makers to make markets.' Mr Bessent hit back at Mr Dimon, saying: 'I've known Jamie for a long time, and for his entire career he's made predictions like this. Fortunately none of them have come true. That's why he's a great banker. He tries to look around the corner. 'We are going to bring the deficit down slowly. This has been a long process, so the goal is to bring it down over the next four years.' He argued that the US was taking in a 'substantial tariff income' that could net the US government as much as $2 trillion, and pointed to plans for a clampdown on prescription drug prices. He said: '[The] president has a prescription drug plan with the pharmaceutical companies that could substantially push down costs for prescription drugs, and that could be another trillion.' Mr Bessent also said he was confident that Donald Trump and the Chinese president, Xi Jinping, would 'iron out' their difficulties in a call soon – following accusations from Mr Trump last week that Beijing had violated a truce on tariffs agreed in May. He said: '[Mr Trump] is going to have a wonderful conversation about the trade negotiations this week with President Xi. That's our expectation.'
Telegraph
24-05-2025
- Business
- Telegraph
Bond vigilantes will force Trump into line
He conceded ground on tariffs after the markets plunged back in April. And he backed down on threats to fire Jerome Powell, the chair of the Federal Reserve, after bond investors took fright. If there is one thing we know for certain about Donald Trump it is this: when it comes to the crunch, he will give in to pressure from Wall Street. Right now, the markets face an even bigger task. Investors and the bond vigilantes will have to force Trump to become the first president since Bill Clinton to balance the books. It won't come to him naturally, and the fiscal mess is hardly his fault. But someone has to get the US deficit under control, which means the president having to change direction. Trump may have named the budget deal that is likely to be agreed by both houses of Congress by the end of the month the 'one big, beautiful bill'. The trouble is, investors do not see it that way. It extends his tax cuts from his first term, and adds in some extra ones as well, such as tax breaks on tips and overtime, which, while they may incentivise longer working hours over the medium term, will cost a lot of money in year one. Overall the budget deal will add an estimated $4 trillion (£3 trillion) to the US national debt over the next decade. The people who will have to pay for all that spending don't like the look of it. After a poorly received auction on Thursday, the yield on 30-year Treasury bills hit 5.14pc, only a whisker away from the 5.18pc last seen way back in 2007. That pushes the cost of American government debt close to a two-decade high. The only difference between then and now is that the country owes far more money. The national debt was $9 trillion then, and it is $34 trillion now. Every extra percentage point that has to be paid in interest on all that is very painful. In fairness, Trump is not really to blame for the mess. Joe Biden's wild spending on green and industrial subsidies pushed the deficit up to unprecedented levels, adding $8.4 trillion to the debt pile during his four years in the White House. And Trump has set Elon Musk's department of government efficiency, or Doge, to work on rooting out waste, while also cutting back on the massively expensive green subsidies, even though the tax credits they offered makes them very hard to cancel. But it is nothing like enough. Efficiency drives never yield anything like as much in savings as expected, and even the ruthless Musk, who knows a little about cost-cutting, is unlikely to get anything close to the $1 trillion or more of reductions he has targeted (especially now that he has grown bored with the whole project and slunk off back to running Tesla). With the budget as it stands, the deficit this year may well reach an extraordinary 7pc of GDP, and that is without any major crisis to deal with, and under an administration that is at least making some attempts to control spending. It is hardly a surprise that bond investors are growing more and more nervous. The task now will be for the markets to force Trump to accept the inevitable. He will have to be the president who finally starts to bring spending under control. The last person in the White House to preside over a balanced budget was Bill Clinton way back in 1999-2000, and the last one before that was Lyndon Johnson in the 1960s. Trump is not, by nature, a man who likes to balance the books. He is a big-spending politician, even if in his case the spending takes the form of tax cuts for businesses and entrepreneurs instead of extra welfare or green spending. That said, politics is rarely very fair. The music has stopped, and Trump will be the man who has to finally start making cuts. He has the authority, and the majority, to finally make significant reductions in welfare programmes, in tax breaks for everything from home ownership to charitable donations, and to military and defence spending. Trump has already floated the idea of the tax increase for anyone earning more than $2.5m a year, but he may well have to go a lot further than that, with a broad range of tax rises for the American middle class as well. This is his second term, so Trump doesn't have to worry about whether he will be re-elected or not. He has the political space to make some unpopular decisions, and he may well be able to sell them to the public. In reality, he no longer has much choice. The markets have already worked out that the president will change his policies if enough pressure is applied. It happened over tariffs – even if he threatened a 50pc levy on imports from the EU on Friday – and over the independence of the Federal Reserve. It can work again over the budget deficit. The bond vigilantes smelled blood this week, and yet the blunt truth is that yields will have to spike significantly higher. But the 'one big, beautiful bill' is not going to last long. It might only take a few weeks, or it might play out over several months, but the markets are about to force Trump to accept a very different role than the one he imagined for himself. He will have to become the first president since Clinton to, if not exactly balance the budget, at least bring the soaring deficit back under control – because right now the US is buckling under the weight of its accumulated debts, and the party cannot last much longer.
Yahoo
22-05-2025
- Business
- Yahoo
Stock market today: Dow, S&P 500, Nasdaq futures tip higher as investors brace for Trump's tax bill, bitcoin hits new high
US stock futures edged cautiously higher on Thursday as investors worried about the US debt pile braced for a looming House vote on President Trump's "big, beautiful" tax bill. S&P 500 futures (ES=F) nudged up roughly 0.2%, while contracts on the tech-heavy Nasdaq 100 (NQ=F) added about 0.3%. Dow Jones Industrial Average futures (YM=F) clung to the flat line, coming off an almost 2% drop for the blue-chip index on Wednesday. Markets are treading carefully as they continue to grapple with the US deficit concerns that fueled the previous session's selloff. The spotlight is now on the budget bill, which could go to a pre-dawn House vote after last-minute revisions late Wednesday to win over Republican holdouts. The GOP's slim majority in the chamber means the fate of the bill is unclear, as markets worry the legislation could add trillions to the existing $36 trillion deficit. Moody's downgraded the US credit rating on Friday and directly cited the proposal in its explanation. By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy Meanwhile, bitcoin (BTC-USD) continued to set fresh record highs, topping $111,000 for the first time as the leading cryptocurrency rose over 3% to $111,878. Ether (ETH-USD) also made gains amid growing institutional demand. On the economic data front, preliminary PMI readings on US manufacturing and services due later will be watched for any insight into the impact of tariffs on businesses in May. Also in focus are a weekly update on jobless claims and US existing home sales. Nike (NKE) shares rose 2% premarket on Thursday after the company said it will raise prices on some products next week and resume selling on Amazon (AMZN) for the first time in six years. Reuters reports: Read more here Snowflake (SNOW) stock rose 9% in premarket trading on Thursday after it raised its fiscal 2026 forecast for product revenue betting on strong demand for its data analytics services as enterprises prioritize artificial intelligence spending. Reuters reports: Read more here. Bitcoin prices topped $110,000 for the first time in the early hours of Thursday morning. The cryptocurrency has been buoyed by a recent push in positive sentiment from the White House and institutional investors. Bloomberg reports: Read more here. Oil prices fell overnight Wednesday before clawing back gains as buyers digest a broad market sell-off as the US builds up oil inventories. Bloomberg reports: Read more here. Nike (NKE) shares rose 2% premarket on Thursday after the company said it will raise prices on some products next week and resume selling on Amazon (AMZN) for the first time in six years. Reuters reports: Read more here Snowflake (SNOW) stock rose 9% in premarket trading on Thursday after it raised its fiscal 2026 forecast for product revenue betting on strong demand for its data analytics services as enterprises prioritize artificial intelligence spending. Reuters reports: Read more here. Bitcoin prices topped $110,000 for the first time in the early hours of Thursday morning. The cryptocurrency has been buoyed by a recent push in positive sentiment from the White House and institutional investors. Bloomberg reports: Read more here. Oil prices fell overnight Wednesday before clawing back gains as buyers digest a broad market sell-off as the US builds up oil inventories. Bloomberg reports: Read more here. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Wall Street Journal
21-05-2025
- Business
- Wall Street Journal
Gold Steady, Supported by Lingering U.S. Fiscal-Deficit Concerns
2339 GMT — Gold is steady in the early Asian session, supported by lingering U.S. fiscal-deficit concerns. Investors are reassessing the long-term outlook for U.S. sovereign risk after Moody's Ratings downgraded the U.S. credit rating last week, Pepperstone's Quasar Elizundia says in an email. Safe-haven assets such as gold could see heightened demand, the research strategist says. However, gold price's short-term upside may be limited if ETF outflows persist, Elizundia says, noting gold ETFs had strong outflows of 30 tons last week. Spot gold is little changed at $3,289.60/oz. (
