U.S. debt has hit $40 trillion, and the Treasury, led by Scott Bessent, has implemented long-term bond buybacks to lower yields, while jointly intervening with Japan to support the yen. To avoid pushing rates higher, the U.S. sold euros instead of dollar-denominated assets, and Japan used an obscure Federal Reserve tool called the FIMA facility to obtain dollars. According to George Saravelos at Deutsche Bank, these measures constitute « soft-form financial repression » policies aimed at containing the yield curve, which could weaken the dollar. The U.S. federal budget deficit is on track to hit $2 trillion this fiscal year, with debt interest costs already at $1 trillion annually, with no serious budget cuts on the horizon.
Source: Read the original article
