Latest news with #nationaldebt
Forbes
19 hours ago
- Business
- Forbes
Ballooning U.S. National Debt Makes Short-Term Bonds A Wiser Choice
The U.S. national debt is spiraling, and it's poised to reshape the bond market. The government is issuing Treasuries at a rapid rate, but demand is struggling to keep pace. This supply-and-demand imbalance may influence Treasury yields, making short-term bonds a potentially safer choice for fixed-income investors. Here's why short-term bonds, like the two-year, might be the smarter play in the current environment. The Debt Crisis And Treasury Yields The U.S. national debt has surged to $36.63 trillion as of last week, according to the U.S. Treasury's "Debt to the Penny" dataset. Recent legislative measures, including a December 2024 spending bill to fund the government and provide disaster relief, have contributed to a debt increase of approximately $1.13 trillion since September 2024, per data from the U.S. Government Accountability Office. This flood of new Treasuries is straining market absorption, as global demand—particularly from foreign investors—shows signs of waning. The resulting supply-and-demand dynamics could influence 10-year Treasury yields, which are at 4.46% as of last week, according to Trading Economics. While some forecasts, like The Financial Forecasts Center, suggest yields may decline to around 3.27% by February 2026, the persistent issuance of Treasuries could exert upward pressure if demand weakens further. Federal Reserve minutes from June 2025, as cited by CNBC, indicate a cautious approach, with most participants anticipating rate cuts, which could temporarily lower yields. However, the Fed's balance sheet, currently at $6.7 trillion, limits its ability to suppress yields through large-scale bond-buying without risking inflationary pressures. Market forces will likely dictate yield trends over the long term, and investors should prepare for potential volatility as sovereign risk grows. The Risks Of Long-Term Bonds At current yields of 4.46%, long-term bonds may not adequately compensate for potential risks. If yields rise due to increased Treasury issuance or shifts in market dynamics, bond prices will fall, particularly affecting longer maturities. The yield curve's recent behavior, with long-term rates holding firm despite anticipated Fed rate cuts, underscores this risk. Higher yields could also shift capital flows. A significantly higher Treasury yield, outpacing inflation—currently around 2.5% as of mid-2025 per latest Consumer Price Index numbers—or faltering GDP growth, could draw capital from equities in a volatile market BLS, 2025. Investors holding long-term bonds at today's yields could face price declines if yields increase, locking them into suboptimal returns. The Case For Short-Term Bonds In this climate, it's wise to focus on short-term bonds, particularly the two-year. These maturities are less sensitive to yield fluctuations, offering protection against price declines. Short-term bond funds, with durations of one to three years, are effective vehicles for navigating this environment. They also provide flexibility, allowing investors to reinvest at potentially higher rates if yields rise. In a recession, where Fed rate cuts might temporarily lower short-term yields, these bonds are likely to hold their value better than long-term counterparts. As market dynamics shift, short-term bonds position investors to balance safety and opportunity in a debt-driven market.
Fox News
a day ago
- Business
- Fox News
Senators sound off on nearly $37T national debt crisis
Democrat and Republican senators shared their fears about the country's national debt crisis while speaking with Fox News Digital. (Credit: Nicholas Ballasy for Fox News Digital)
Washington Post
a day ago
- Business
- Washington Post
GOP senators reject Trump's pitch to use tariff revenue for ‘rebates'
President Donald Trump has discussed using revenue from new tariffs to send 'rebates' to Americans — but Republicans in the Senate aren't leaping at the idea. The U.S. government has taken in more than $93 billion from tariffs through mid-July, and most GOP lawmakers want to put all of that toward reducing the national debt, which is over $36 trillion. The debt is expected to grow by another $3.4 trillion over the next decade due to Republicans' sweeping tax and immigration bill, enacted this month.
Daily Mail
3 days ago
- Business
- Daily Mail
Investor who called 2008 crash delivers grim warning to the US
Billionaire hedge fund titan Ray Dalio (pictured), who famously predicted the 2008 financial crash, has sounded a stark alarm over America's spiraling debt. Dalio warned that without swift action to slash the federal deficit, the US could face an 'economic heart attack' in the next three years. 'If the US doesn't cut the deficit to 3 percent of the GDP, and soon, we risk facing an economic heart attack in the next three years,' Dalio wrote on X. 'The good news is that these cuts are possible.' The national debt is nearing $37 trillion — equal to 99 percent of GDP — and the Congressional Budget Office projects it could hit 150 percent by 2055. Dalio, founder of Bridgewater Associates — the world's biggest hedge fund — said a 4 percent adjustment to spending and tax revenues could stabilize the economy and even lower interest rates. 'We know this kind of balance is possible because it happened between 1991 and 1998,' he wrote, pointing to previous bipartisan deficit deals. 'My fear is that we will probably not make these needed cuts due to political reasons, and will have even more debt and debt service encroaching on our spending that will ultimately lead to a serious supply-demand problem.' Dalio has repeatedly warned that economic decisions made by the White House will end in economic catastrophe. In April the billionaire spoke against Trump's decision to launch a global trade war via tariffs on America's trading partners. 'Some people believe that the tariff disruptions will settle down as more negotiations happen and greater thought is given to how to structure them to work in a sensible way,' Dalio wrote in a post on social media site X. 'I am now hearing from a large and growing number of people who are having to deal with these issues that it is already too late.' JPMorgan's CEO Jamie Dimon (pictured) warned last month that the US economy was on shifting 'tectonic plates' and warned that inflation could once again rear its ugly head. 'You have all these really complex, moving tectonic plates around trade, economics, geopolitics, and future factors, which I think are inflationary: military, restructuring of trade, ongoing fiscal deficits,; he told the Morgan Stanley US Financials Conference. The co-founder of Home Depot Ken Lagone also raised concerns about US debt, and said it is a 'scary' indicator for the state of the economy. The billionaire said he hoped Washington would heed his warning that 'we have to be mindful of the importance of our status in the world economy and the world markets. 'If we fritter that away, we're in trouble,' the 89-year-old said. 'Four weeks ago, we couldn't float a 20-year bond. They were unbiased. That's a dangerous signal. That's the beginning,' Langone said referencing recent crises in the bond market.
CNET
4 days ago
- Business
- CNET
No, You Shouldn't Venmo the Government to Pay the National Debt. Here Are Better Uses for Your Money
Splitting the national debt bill with Uncle Sam is unrealistic -- and a waste of your hard-earned cash./CNET You know that annoying friend who's always strapped for cash when the bill comes? Yeah, Uncle Sam is that friend. And he wants to know if you could Venmo him some money. In a bizarre twist to the US government's ballooning deficit crisis, the Treasury Department is now accepting "donations" via the digital payment app Venmo to "reduce the public debt," which is currently more than $36 trillion. Needless to say, if every American (including children) pitched in, we'd have to each pay more than $100,000 each to get that balance to zero -- and then the debt would immediately start growing again. Since the news went viral after NPR's Jack Corbett post about it on X, the public response has been, unsurprisingly, not positive. "What in the actual dystopian hellscape is this?" said TikTok user @ Many critics have pointed out that the government already takes a huge cut through taxes, and now the administration is asking for more. Venmo is just the latest voluntary payment option offered by the Gifts to Reduce the Public Debt program, which has been around since 1996. Previously, you were only able to send money to Uncle Sam via a bank account (ACH) transfer, debit or credit card or PayPal. In an economy besieged by high prices, layoffs andother factors beyond your control, improving your household's financial security is a much smarter way to disburse your hard-earned cash. Here are four alternative ways to put your money to better use. 1. Build your emergency fund An emergency fund is your financial lifeline if you're hit with a sudden medical bill, job loss or other large expense. Experts recommend having three to six months' of expenses set aside, but at least two in five Americans don't have any emergency funds saved up at all. Anything you can put away helps -- especially if you put the money in a high-yield savings account where it can grow faster. 2. Donate to your own debt High-interest debt, like credit card and personal loan debt, can cripple your finances for years. Throw everything you can toward your outstanding balances. You'll barely make a drop in the bucket if you contribute to paying off the national debt, but you can significantly improve your financial situation if you focus on your own. 3. Contribute to an HSA or FSA Millions of Americans could lose Medicaid under President Trump's "Big, Beautiful Bill," which is expected to increase the national debt by $3.4 trillion between now and 2034, according to the Congressional Budget Office. Medical debt is the leading cause of bankruptcy in the US. By putting money in a health savings account or flexible spending account, you can make it easier to pay for your medical expenses while enjoying some tax benefits -- something you won't get if you simply hand over your money to the government. 4. Donate to a charity If you feel comfortable with your current financial situation and want to help others with your extra cash, consider donating to a charity where your money can actually make a difference. Charity Navigator and CharityWatch can help you find reputable organizations that match the causes you're passionate about.
