The US is sleeping walking into a financial crisis. The last three years Biden has deliberating running the economy hot.. through inflation reduction act and the infrastructure bill.. which are stimulus programs.. to avoid a recession. But Trump has flip the script.. with his Tariff policy..
Why does the US have to avoid a recession at all cost..because of the large amount of US debt.
Historically recessions increase government spending through unemployment claims and lower employment decreases government revenue. The current deficit is $2 trillion 7% of GDP.. a prolonged recession could potentially double the deficit. Bond investors are realising if the US is heading into recession.. despite Fed tools such as repo loans and QE, that can absorb bonds.. it is going to be difficult (as % deficit to GDP) or unsustainable to absorb the amount bonds that is going into the market domestically..
if bond yields surge, the US dollar will fall.. and POG will rise.
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