Debtflation Nation! Fed Gov’t Spending $2 Billion PER DAY, Debt To GDP Headed To 200%, Electricity Costs SOARING

Biden and Congress have never met a project that they weren’t willing to fund (except a border wall with Mexico, of course).

Inflation is heating up again as the Federal government continues to spend.

4-5% by November…

US CPI on trend for 4-5% at US election in November.

Source: BofA

Above 5%…?

Strong CPI raises market probability of YE25 rates above 5%.

Source: Goldman

Cyclical inflation remains too elevated

“Our measure of cyclical inflation–which should capture the impact of excess demand on prices–appears to be stuck at around 5%, which is too elevated”

Source: Safra

US alone

The US is the only economy in the G10 where the latest inflation print surprised to the upside.

Source: Goldman

200% of GDP

Under current policies, government debt outstanding will grow from 100% to 200% of GDP.

Source: Apollo

Close to $9 trillion in maturities

That’s a significant amount of government debt maturing within the next year.

Source: Apollo

Every year a deficit

OMB forecasts 5% budget deficit every year for the next 10 years.

Source: Apollo

A billion per day….is long gone

US government interest payments per day have doubled from $1bn per day before the pandemic to almost $2bn per day in 2023.

Source: Apollo

Biggest Story of 2020s…Ugly End of 40-year Bond Bull

Chart shows long-term US government bond (15+ year) rolling 10-year annualized returns, %.

Source: Flow Show

Highest yields in 15 years

The intermediate part of the yield curve still offers the highest yields in over fifteen years.

Source: Piper Sandler

Finally, electricity costs keeps rising, ESPECIALLY with the misnamed Inflation Reduction Act (IRA). The real name of the IRA should have been the Large Green Donor Increase Act (LGDIA).