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5 key points to have in mind about the US public debt

 

The essential

Since Donald Trump won the presidency and the Republicans, a majority in Congress, the bond markets have priced in a steep rise in fiscal deficits. However, Congressional Republicans are traditionally opposed to deficits and the issue of public debt has led to recurring political crises in recent years. The issues of US debt and fiscal manoeuvring room will be key to the coming years.

While currently low interest rates are stemming the rise in US public debt, keep in mind that, as things currently stand, the debt-to-GDP ratio is expected to be driven up significantly in the coming decade by the ageing of the population. Against this backdrop, it is clear that policies that widens the primary deficit, combined with a more pronounced rise in yields, will rather rapidly expand US federal debt significantly. This will probably be the main focus of negotiations between President Trump and Congressional Republicans.

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December 2016

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Decembre 2016

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DRUT Bastien , Fixed Income and FX Strategy
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5 key points to have in mind about the US public debt
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