US Budget Crunch: CBO Warns Federal Interest Costs Now Higher Than Defense Spending, Deficits To Remain Above 5.5% Until 2034
Portfolio Pulse from Piero Cingari
The Congressional Budget Office (CBO) has warned that federal interest costs are now higher than defense spending, with deficits expected to remain above 5.5% of GDP until 2034. The federal deficit is projected to rise to $1.9 trillion in 2024, up from $1.5 trillion estimated in February. By 2034, debt held by the public is expected to total $50.7 trillion, equating to 122% of GDP. Rising interest costs are the main driver behind these deficits, with net interest outlays projected to reach $1.7 trillion by 2034. The CBO's projections indicate persistent high deficits and escalating interest costs, posing significant financial strain for the U.S. government.
June 19, 2024 | 4:44 pm
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NEUTRAL IMPACT
The US Treasury 10 Year Note ETF (UTEN) could experience heightened volatility due to rising federal interest costs and persistent high deficits. Bond investors may face increased uncertainty as the benchmark 10-year Treasury note could fluctuate based on inflation fears, deficit spending, or economic slowdown.
The rising federal interest costs and persistent high deficits are likely to impact the bond market, leading to potential volatility in the US Treasury 10 Year Note ETF (UTEN). Investors may react to fears of inflation, deficit spending, or economic slowdown, causing fluctuations in the ETF's price.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80