Kathmandu. The extreme turmoil seen in the stock market around the world has made investors unstable. Sometimes the markets seem to be moving at a high pace and sometimes they are continuously declining.
Brokerage firm Jefferies has warned that this volatility in the global stock market may continue. The main reason for this is the United States. “Rising U.S. debt is a wake-up call for global stock markets,” the Jefferies report said. ’
What is the cause of this crisis?
In its new report, Jefferies said, “America’s deteriorating financial conditions are putting increasing pressure on long-term Treasury bonds.” This directly leads to potential risk in the stock market. ’
According to Jefferies strategist Christopher Wood, the biggest culprit of this risk is the 10-year U.S. Treasury bond yield rising above 5%. This can destabilize the stock market in the future.
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On Aug. 18, the U.S. debt exceeded levels unimaginable a few decades ago, given America’s deteriorating financial situation. According to reports, the US national debt has reached about $40.05 trillion. That’s an increase of 7.8% from the previous year.
The federal government recorded a deficit of about $1.8 trillion in the first 10 months of the current fiscal year. The Donald Trump-led government recorded a fiscal deficit of $432 billion in July alone. This is the highest monthly loss since March 2021.
These statistics about America’s growing debt burden are once again attracting the attention of global investors. Because the problem is no longer limited to the growing size of U.S. debt. But there is also the rising pace of debt, the cost of servicing that debt and the increasing pressure on the U.S. bond market. These figures pose risks to the global stock market.
Widening gap between income and expenditure{
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Federal revenue in July fell 1.3% from a year earlier and decreased by 5.7% over the past three months. Tax revenue, including fees, decreased by 8% in July and by 6.4% in the three-month period.
In the United States, on the other hand, government spending seems to be moving in the opposite direction. Total federal spending in July rose 21.7% from a year earlier and by 10.7% in the past three months.
When considering the U.S. bond market, the 10-year Treasury bond yield is at 4.683%. That’s the highest in 19 years. The 30-year bond auction is up 5.216%. This is the highest level of auction since 2001.
The threat is not limited to the US
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These statistics clearly show that the drama unfolding in America is not limited to America. It’s having a global impact. This is because government bonds issued by the US are held by banks, pension funds, insurance companies, investment funds and foreign governments around the world. This means that the continued rise in U.S. Treasury yields is having a much bigger impact on U.S. government finances than it does on U.S. government finances. –Agency
