“The Treasury Department predicted in a report Monday that the government’s borrowing needs for the second half of 2018 will be $769 billion — the highest its borrowed since 2008 during the financial crisis.
“Bloomberg reports that Treasury foresees issuing $329 billion in net marketable debt between July and the end of September, and another $440 billion between October and the end of the year. The total $769 billion comes in at the highest borrowing estimate since $1.1 trillion between July and December of 2008 in the middle of the financial crisis.
“The net marketable debt the Treasury expects to issue from July through September is also the fourth-largest total for that quarter and far higher than was estimated earlier this year.”
“Before 2030, we could have trillion-dollar annual interest payments. Interest rates have been low until now, but that is changing. As rates go up, we have to pay more on new debt and on all accumulated debt.
The amount we pay in interest on the debt is set to triple over the next ten years. But if interest rates rise just 1 point higher than expected, the government will owe an extra $1.9 trillion over 10 years.”
“In the longer term, the cut will further denude the US government of revenues at a time when an ageing population is pushing up the cost of Social Security and Medicare.”
“It is crucial for banks to maintain sufficient loss-absorbing capital buffers to weather the next economic downturn. Research shows, however, that bank capital levels are still too low. It is particularly important for regulators to address this issue promptly given the economy’s position in the business cycle.”
“A widening in credit spreads means that investors require additional returns to hold corporate bonds — indicating that there is more risk and that economic conditions are expected to deteriorate. In a note earlier this month, Crossborder Capital said that wider spreads are not just a risk for the United States, but also to other international markets, “such as European high-yield and emerging markets credits” that “could be sucked into the vortex.””
“Mexico’s economic output shrank slightly in the second quarter as a decline in industrial production offset gains in services.”
“The rolling power blackouts in the [Venezuelan] state of Zulia pile more misery on Venezuelans living under a fifth year of an economic crisis that has sparked malnutrition, hyperinflation and mass emigration.”
“Brazil’s central bank is likely to hold interest rates at an all-time low on Wednesday even after inflation jumped back within its target range, due to an underwhelming economic recovery keeping a lid on price pressures”
“Turkish government bonds extended losses amid concern that a diplomatic spat with the U.S. over a detained American pastor in Turkey is escalating. The yield on 10-year debt jumped …to an all-time high of 18.86 percent after Sabah newspaper reported that a Turkish court rejected an appeal by lawyers for Andrew Brunson to be released and for his travel ban to be lifted. The U.S. is threatening imminent sanctions on Turkey should he not be released.”
“Hundreds of Iranians joined a street protest Tuesday in the central city of Isfahan to denounce the government’s handling of economic problems, including the record low value of Iran’s currency.”
“Officials in Islamabad have accused Washington of trying to strong-arm Pakistan into scaling back billions of dollars’ worth of Chinese investment in their country’s infrastructure as part of a potential bailout by the IMF.”
“While a meeting of the [Chinese] Politburo Tuesday recognized that the external environment — read Donald Trump’s trade war — has “significantly changed,” the nation’s top leadership under President Xi Jinping affirmed that the campaign will continue, albeit at a more measured pace. That matches the approach of the government as a whole, which has rolled out targeted policy shifts from tax breaks to bond-market support in recent weeks.”
“The manufacturing sector in South Korea continued to contract in July, and at a faster rate, the latest survey from Nikkei revealed on Wednesday with a PMI score of 48.3. That’s down from 49.8 in June, and it moves farther beneath the boom-or-bust line of 50 that separates expansion from contraction.”
“House prices have fallen at their fastest rate in more than six years, fuelling concerns that prices in Sydney and Melbourne may fall “too far, too quickly”, hurt economic growth and drive anxiety among policymakers.”
“The eurozone’s economy slowed further in the three months through June, as exports sputtered and business confidence weakened on worries over future relations with the currency area’s largest trading partners.”
“…even the most committed euro enthusiast cannot honestly say that the single currency has been a success. Europe has quite plainly overextended itself. Unfortunately, the sociologist Ralf Dahrendorf was right to conclude: “The currency union is a grave error, a quixotic, reckless and misguided goal, that will not unite but break up Europe.””
“Greece still faces an uphill struggle after the end of its bailout program and it is not clear that its public debt load will be sustainable in the long term, the International Monetary Fund said Tuesday.”
“A wave of defaults from sellers in the internal market in Russia has exacerbated quality-driven concerns over the size of this year’s wheat crop…”