Three questions to ask about the US borrowing over $3T

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Stimulus solidarity rallies euro & implications of US borrowing over $3T

By Blu Putnam, Chief Economist, CME Group

Euro Rallies Amid Europe’s Pandemic Response

  • EU members to collectively raise 750 billion euros from bonds issued.
  • Ground-breaking move to stimulate sagging economy rallies euro.
  • Debt issuance binds 27 EU members in a coordinated fiscal initiative.
  • Member-nations hit the hardest by pandemic will receive grants.
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Implications of US Borrowing $3 Trillion in H1 2020

  • US Treasury issued more than $3 trillion in new debt securities in H1 2020.
  • Private local, foreign investors were top buyers, Fed took 46% of issuance.
  • Without Fed involvement, US Treasury yields could be much higher.
  • Higher gold, weaker dollar signaling rising inflation expectations?
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