The United States government registered a deficit of $ 345 billion in August, with receipts of $ 344 billion eclipsed for $ 689 billion in expenses. The largest disbursements were Medicare at $ 141 billion and Social Security of $ 134 billion, but what stands out is a net interest of $ 93 billion, now the third largest expense. This highlights the growing pressure that the increase in loan costs is placing in federal finances.
The Federal Reserve is expected to reduce rates at 25 basic points in September, but history suggests that it will not be so simple. In September 2024, the Fed in the Fed in 100 Pbps only to see the yields at the long end moves very high. The 30 -year -old treasure increased from 3.9%to 5%, and today is 4.7%.
With recent data that aim for an acceleration in inflation, the risk is that reduction rates could boost more price pressures. That would force the highest yields, increase debt service costs and potentially deepen the fiscal hole, creating a challenging backdrop for political leaders and markets equally.
Markets are responding decisively. Gold has increased to new record records, just below $ 3,670 per ounce, marking an annual gain of almost 40%. Bitcoin is also winning traction, rising above $ 115,000 as investors seek alternatives in an environment where debt sustainability is becoming a greater concern.
