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Last night, the United States released economic data for the third quarter. The current account deficit reached 2,17100 million.
However, this is slightly less than the market expectation of 2,22000 million, and it is also significantly narrower than the previous quarter's 2,51100 million.
Faced with deficits, the United States may issue bonds again. What will happen if U.S. debt exceeds the upper limit?
01, the deficit continues to increase
In fact, since the outbreak of the new crown epidemic in 2020, the current account deficit of the United States has not been has continued to grow, and the year with the fastest year-on-year growth should be 2020, which is an increase of 34.8% compared with the year before the new crown .
The growth rate has fallen slightly in the past two years, but it is still growing, and the proportion of the current account deficit in GDP has also increased year by year.
This should have a lot to do with the rising trade deficit of the United States.
From the second half of last year to now, because energy prices have been much higher than 2021 and 2020, for the United States, a major energy exporting country, it can create a lot of export revenue and suppress the trade deficit, but despite this, the United States still maintains a large trade deficit.
10html The trade deficit in May reached nearly 80000 million US dollars, of which the deficit of commodities was even as high as 99000 million US dollars.
Of course, from the perspective of the United States, these problems are not big, because the U.S. dollar, as a reserve currency, can meet expenditures by continuing to issue debt.
02, U.S. debt is in crisis
But in fact, it is becoming more and more difficult for the United States to issue debt, because sellers around the world are now eager to sell U.S. debt.
In the capital flow data released by the U.S. Treasury Department, 111500 million in U.S. debt was sold off by overseas investors, and this is just this year's 10htmlThe reduction amount in May, The current cumulative balance of U.S. debt held by overseas investors is 7.185 trillion, which has dropped to the lowest record since 5html last year in May.
In 10html this year, Japan, the largest overseas creditor of the United States, became the largest seller of U.S. debt. In addition, China also sold 240html US$500 million, and the United Kingdom, which had previously increased its holdings, also turned to selling.
Although some countries are buying, including France and Canada, the buying amount is far less than the selling amount.
Since entering the second half of the year, the liquidity problem of U.S. debt has become increasingly serious, and has even gradually evolved into a crisis.
The selling wave has been continuing. Although the yield of U.S. debt has fallen significantly during this period, the enthusiasm of buyers has always been low.
Overseas institutional investors have been selling. Although there are certainly buyers when selling, buyers are mainly domestic and individual investors in the United States. Maybe these retail investors will become the takers.
The scale of active selling is much greater than the scale of active buying, causing the overall price of U.S. debt to fall by more than 12% compared with the beginning of the year.
The Federal Reserve's recent balance sheet reduction scale is very close to the planned monthly 95000 million. It can be seen that the Federal Reserve has also spared no effort in selling U.S. debt. As the largest buyer, it has reduced its holdings of U.S. debt in the name of shrinking its balance sheet, resulting in the seller's power being much greater than the buyer.
U.S. Treasury Secretary Yellen warned that if the liquidity crisis continues to deepen, the U.S. Treasury market may collapse and evolve into a full-scale financial crisis.
For this reason, she had to say that the Treasury Department would buy back U.S. debt in the market if necessary.
It is increasingly difficult to issue new bonds under such circumstances.
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