There is a disagreement over whether interest rates on U.S. government bonds will continue to rise or fall. There is also disagreement among experts in the United States. JPMorgan Chase CEO insists on preparing for 7% interest rate. Especially in the worst-case scenario, the global economy warns that prices could fall into so-called stagflation, which continues to rise amid a recession. On the other hand, Goldman Sachs expects the sale of government bonds to subside due to rising international oil prices in the fourth quarter of this year.
The 10-year Treasury yield will fall as the U.S. economy slows due to high oil prices and the resumption of student loan repayment. In addition, the Wells Fargo Investment Research Institute predicted that rising debt costs will increase the possibility that the U.S. federal government will cut spending, which will lead to a recession soon. Each person has a difference in judgment, but there is one overlapping point. It’s a warning of a possible recession.
The U.S. has been considering the amount of expenditure in fiscal execution based on the dollar, the key currency, but has not worried much about the revenue that other countries are most worried about. I drew up an expenditure plan that exceeds the amount of revenue, but it was enough to issue government bonds as it was insufficient. This was possible because the issuance of government bonds was able to attract as much money as possible with cheap interest. However, as high-interest rates continue, such as raising interest rates on U.S. government bonds, the U.S. government is now burdened with interest costs.
You can raise taxes, but the United States also doesn’t want to talk about tax increases that any politician will have to chip away at. It will be even more so because the presidential election is coming up next year. The U.S. federal government’s choice does not seem easy at a time when there is already a lack of money to pour into various conflict areas such as Ukraine, Israel, and Taiwan. It is difficult to continue issuing government bonds at high interest rates, but to reduce government spending at the risk of a recession.
In order for Korea to survive on trade, it is necessary to always prepare one step ahead of the international economy as well as financial market trends. Now that geopolitical variables such as Ukraine, Israel, and Taiwan overlap, such insights are needed more than ever.