Treasury is about to flood the market with debt to fund U.S.’s $1 trillion deficit — and that is a concern

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Last month the U.S. Treasury laid out its plans to borrow $814 billion between July and December, after the Trump administration and Congress agreed to a two-year postponement of the U.S. debt ceiling, ensuring no government shutdown or a federal default.

Amid the stock-market rout, the chances of a half-percentage-point cut in the federal funds rate in September rose to 30.4%. Markets are pricing in a 69.6% chance of a quarter-point rate cut next month.

Slowing global economic growth due to the U.S.-China trade war is resulting in central banks’ easing monetary policy, and an array of geopolitical risks from Brexit, to Italian political instability, to U.S. sanctions on Iran and violent protests in Hong Kong are encouraging investors into the safe haven of U.S. debt.


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