Daily update
Daily update
- The head of the US Congressional Budget Office issued a warning about US debt sustainability, suggesting an extreme parallel with the debt debacle presided over by former UK Prime Minister Truss. US debt levels are not necessarily a concern (the US could sustain a 150% or even 200% debt-to-GDP ratio if it chose). The problem is the rapid growth in debt—which raises questions about the long-term ability of the US government to service its debt.
- The US separation of powers combined with political polarization makes deficit control difficult. Members of Congress decorate the budget with baubles of tax breaks and spending that favor their own constituency. However, bond markets are not “free” markets—there are captive investors regulated into purchasing bonds. One part of the Truss bond debacle was due to the loss of control over those captive investors.
- US February durable goods data are due—a volatile data set, but which should show a modest increase in orders generally consistent with the soft landing scenario.
- US and German consumer confidence data is subject to the normal problems of survey based evidence, plus the risks of political polarization. German data became slightly less negative and (inevitably) the previous month’s data was revised stronger.