U.S. debt

Musk describes the DOGE blueprint and attempts to boost market confidence in U.S. debt

ChainCatcher news, according to Jinshi reports, Elon Musk, who leads the U.S. government's efficiency department "DOGE," recently outlined a blueprint for significant cuts to U.S. spending and regulations, including the abolition of the U.S. Agency for International Development (USAID). Musk stated in an X Spaces audio conference that a thorough cleanup of U.S. regulations is needed, revealing that his team is pushing to close this foreign aid agency established by U.S. Congress, which would be the largest reduction plan to date.Additionally, Musk announced that he will have a dialogue with JPMorgan CEO Jamie Dimon this week, attempting to persuade the bond market that his "DOGE" cost-cutting plan can enhance market confidence in U.S. debt. Any signs of significant spending cuts and improvements in the fiscal deficit are good news for investors betting on a decline in U.S. Treasury yields. This nearly hour-long audio discussion was Musk's first detailed talk about the "DOGE plan" since Trump's election victory, with participation from Republican Senators Joni Ernst, Mike Lee, and former "DOGE" co-chair Vivek Ramaswamy in this free discussion.Analysts believe that Musk's intensive actions two weeks before Trump's administration indicate that the authority of "DOGE" has far exceeded the scope of the executive order that created the department—this order only required it to "improve government efficiency and productivity by upgrading federal technology software."

Reuters: The worsening outlook for U.S. debt is more reflected in gold and Bitcoin

ChainCatcher news, according to a report by Reuters, market observers say that concerns over the rapid rise in U.S. government debt are part of the reason for the recent surge in gold and Bitcoin prices, although so far, the U.S. Treasury market remains relatively optimistic about the country's fiscal outlook.The U.S. fiscal year 2023 budget deficit has expanded to $1.7 trillion, and it is expected to reach $2.6 trillion by 2034. Meanwhile, U.S. public debt is projected to hit 106% of GDP by 2028, up from 97% in fiscal year 2023. Since the $5 trillion mark in 2007, the scale of U.S. debt has skyrocketed to $27 trillion.The growing U.S. government debt has drawn more attention, with interest payments taking up a larger share, sometimes even exceeding defense spending. This deteriorating trend has driven demand for Bitcoin and gold, which are often used as hedges against inflation and the declining purchasing power of the dollar.Brad Bechtel, global head of foreign exchange at Jefferies, stated that concerns over the U.S. debt cycle and the devaluation of fiat currency have driven the narrative for Bitcoin and gold, leading investors to allocate more to these assets. Lawrence H. White, an economics professor at George Mason University, believes that the interest in Bitcoin and gold also stems from heightened inflationary turmoil. More concerning is that, even in peacetime and with full employment, debt and deficits continue to rise, and the next recession could trigger even greater debt growth.In addition to hedging risks, the rise in Bitcoin prices is also influenced by the launch of new ETFs and the upcoming halving event. Gold reaching historical highs is attributed to expectations of interest rate cuts by central banks and the demand for diversification of foreign reserves. Nevertheless, the rapid deterioration of the U.S. fiscal situation remains a major concern for some investors. Market strategist Michael Hartnett pointed out that the recent highs in gold and tech stocks indicate that to prevent a debt crisis, the U.S. may have to adopt policies such as yield curve control.However, Nicholas Colas, co-founder of DataTrek Research, stated that several indicators in the Treasury market currently show that bonds have not yet reflected expectations of a deteriorating fiscal outlook. Investors still view the dollar as a reserve currency and U.S. Treasuries as relatively safe assets. If seeking large-scale risk-free assets, the U.S. Treasury market remains the preferred choice.
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