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China continues to reduce its holdings of 409.1 billion U.S. debt, and the U.S. economy may go into recession, with billions of dollars evaporated
来源: | Author: Anna Qu | Publish date: 2022-06-14 | 89 views | 分享到:
On June 13, US bonds and US stocks continued their decline. The sharp rise in short-term US Treasury bond interest rates made the key yield of US bonds close to upside down again. Previously, the CPI in May, which was newly announced on June 10, has accelerated to 8.6%, rising to the highest level since 1981. It has risen for 24 consecutive months without providing any breathing space. This shows that the theory of inflation peaking and the temporary theory are wrong.

The Federal Reserve is ready to raise interest rates quickly to try to quell the worst inflation outbreak in 40 years. It may raise interest rates by 50 basis points until September to combat inflation. If the Federal Reserve makes mistakes, this strategy may plunge the US economy into a great recession.



The Fed's attempt to ease inflation by slowing the economy has exacerbated already bad economic sentiment. As households bear the burden of rising prices, consumer confidence has been declining throughout the year. Many Wall Street economists and small business owners are increasingly worried about the possibility of a major recession in the U.S. economy next year.

The gdpnow forecast model released by the Atlanta fed on June 8 shows that the US economy may have negative growth for the second consecutive quarter (the GDP growth rate in the first quarter was negative 1.5%), and the growth rate in the second quarter has been reduced from 1.3% on June 1 and 1.9% on May 27 to only 0.9%, which also means that it has dropped by 1% in ten days. At this rate, the GDP will be negative in ten days, formally triggering a recession, A recession is defined as two consecutive quarters of negative GDP growth.



Even the American elite now openly admit that the United States is facing a recession storm. For example, Charles Shaff, CEO of Wells Fargo Bank, said that the U.S. economy is "undoubtedly" heading for recession; Some economists say that even if the United States can get out of recession in the short term, the speed of inflation (the price has increased by 8.6% in the past year), the persistent imbalance between supply and demand and the policy response to it may snowball into a more serious depression like great recession crisis.



Most notably, a new survey released by US media CNBC shows that 57% of Wall Street traders told investigators that the US economy is currently in a state of great recession, while only 21% did not. This shows that Wall Street continues to send a signal of looking down on the US economy, which also makes the Federal Reserve's aggressive tightening expectation continue to boost US bond yields of all maturities and suppress US bonds.

Under the influence of these pessimism, the US debt collapsed again due to the higher than expected inflation data. The expectation that the US Federal Reserve would slow down the pace of interest rate hike in September was completely dashed. The US bond price plummeted and was heavily sold off by the market. The short-term and medium-term US bond yields both hit the highest in more than 10 years. Some US bond yield curves have been inverted again. Historical data show that the inversion of the US bond yield curve is a signal that the US economy will experience a great recession.

The latest data show that the two-year US bond yield rose to 3.057%, the highest since june2008. The 10-year yield hit a peak of 3.178% since May 9. The yield of three-year US bonds also jumped to the highest since december2007, and the yield of five-year US bonds rose to the highest since august2008.

According to the data released by the U.S. Commodity Futures Trading Commission on June 12, hedge funds have been net short selling U.S. bonds since May 29, suggesting that the yield of 10-year U.S. bonds may continue to remain above 3%, which does not rule out breaking the previous high again. Inflation expectations are rising again, adding to the rising expectation of faster and larger interest rate hikes by the Federal Reserve, making hedge funds ready to bet that the price of U.S. bonds will fall further, This also means that there is still adjustment pressure on US stocks and US bonds in the short term, suggesting that US bonds and US stocks will continue to be sold off by the market.