Uzbekistan
2024-05-08 22:30
IndustryUS national debt - stable profit for investors
The cost of servicing US debt continues to fly into space. According to forecasts, the amount could rise to $1.7 trillion by April 2025. The cost of servicing the US federal debt currently accounts for a record ~12% of government spending. But no matter how scary it may sound and no matter how much a crisis is predicted for the American economy, this will not happen. Such events, on the contrary, open up stable and reliable opportunities for investing in financial instruments.
Rising interest rates over the past two years have benefited bond investors who are looking to not only preserve but grow their capital while outpacing inflation. While investors benefit, the US government is achieving record interest payments on its debt of up to $34 trillion.
In fact, according to Bloomberg, the U.S. Treasury paid about $89 billion in interest costs on outstanding debt in March, which works out to about $2 million per minute.
These interest payments are expected to rise for the foreseeable future as the government cannot curb its appetite for spending money and the Federal Reserve shows little sign of cutting interest rates anytime soon.
According to the Federal Reserve Bank of St. Louis, the federal government's interest costs are expected to exceed $1 trillion this year, an all-time record and nearly double the amount it paid in interest costs before the Fed began aggressively raising interest rates.
The U.S. Treasury paid about $234 billion in interest expenses in the first three months at this time last year.
The 10-year U.S. Treasury yield is about 4.50%, marking the end of the era of zero interest rates during which investors were forced to take on more and more risk to get decent returns, whether through dividend stocks or riskier stocks.
Investors can now expect stable returns without the risk of losing their capital through US Treasuries, and they seem to be thrilled about it, as evidenced by the whopping $6 trillion currently sitting in money market funds.
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US national debt - stable profit for investors
Uzbekistan | 2024-05-08 22:30
The cost of servicing US debt continues to fly into space. According to forecasts, the amount could rise to $1.7 trillion by April 2025. The cost of servicing the US federal debt currently accounts for a record ~12% of government spending. But no matter how scary it may sound and no matter how much a crisis is predicted for the American economy, this will not happen. Such events, on the contrary, open up stable and reliable opportunities for investing in financial instruments.
Rising interest rates over the past two years have benefited bond investors who are looking to not only preserve but grow their capital while outpacing inflation. While investors benefit, the US government is achieving record interest payments on its debt of up to $34 trillion.
In fact, according to Bloomberg, the U.S. Treasury paid about $89 billion in interest costs on outstanding debt in March, which works out to about $2 million per minute.
These interest payments are expected to rise for the foreseeable future as the government cannot curb its appetite for spending money and the Federal Reserve shows little sign of cutting interest rates anytime soon.
According to the Federal Reserve Bank of St. Louis, the federal government's interest costs are expected to exceed $1 trillion this year, an all-time record and nearly double the amount it paid in interest costs before the Fed began aggressively raising interest rates.
The U.S. Treasury paid about $234 billion in interest expenses in the first three months at this time last year.
The 10-year U.S. Treasury yield is about 4.50%, marking the end of the era of zero interest rates during which investors were forced to take on more and more risk to get decent returns, whether through dividend stocks or riskier stocks.
Investors can now expect stable returns without the risk of losing their capital through US Treasuries, and they seem to be thrilled about it, as evidenced by the whopping $6 trillion currently sitting in money market funds.
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