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Furthermore, concerns about potential sanctions from a future Trump administration might compel foreign central banks, which usually favor holding long-term bonds, to unload their Treasuries, contributing to rising yields.
The Debt Situation: Rising Risks for America
America’s debt-to-GDP ratio has been climbing since the 1980s, standing at a staggering 123%, one of the highest globally. This trend is unlikely to reverse in the near term due to significant spending programs, including the Inflation Reduction Act. Last year’s deficit amounted to roughly 6% of GDP, and projections indicate this figure may climb further under Trump’s presidency, particularly given his commitment to extending tax cuts without specifying any spending reductions.