Analysis-Markets wrestle with Trump’s unconventional debt ideas

By boldness of the beard

New York (Reuters) – Investors weigh whether Donald Trump might resort to unconventional ideas to try to make the US debt hurt under control, after the president insisted that he will not cut the advantages of popular health and retirement.

Some Trump advisers have adopted unconventional ideas in recent months, including forcing foreign governments to switch bond bonds cheaper in order to reduce interest payments and sell accommodation cards to wealthy foreigners at a price of $ 5 million per pop.

With the presence of many officials and economists who say American debt is on an unsustainable road, investors in American bonds, currency and stocks began to pay more attention to these ideas.

The US debt is 36 trillion dollars, or more than 120 % of the annual economic production (gross domestic product), and rises rapidly as the government spends more than it is raised in taxes. Last year, the US budget deficit occupied 6 % of GDP – although Treasury Secretary Scott Bessin said he wanted in half.

The new Trump administration has launched aggressive moves to reduce federal spending through the administration of government efficiency in Illon Musk. It has announced plans to increase additional revenues by imposing a heavy tariff on imports of commercial partners including China, Mexico and Canada.

More than half of the decorations of investors and economists were told Reuters that the results of these efforts to close the deficit remained unclear. They added that any of the other ideas outside the box will have a sufficient impact to bring the financial situation.

In fact, forcibly swapped with foreign governments can undermine the merit of credit in the United States and disturb the global financial system, as they said – Bessent's goal of reducing the return of the US cabinet for a period of 10 years, supporting the costs borrowing through the economy.

“The possibility of tampering with a long -term return through a kind of financial or political engineering operations is very limited,” said Larry Samers, an economist who held the position of Minister of Treasury during the era of President Bill Clinton, a democrat.

“Thinking outside the fund is exactly what is required,” said an official with the National House of the White House of the White House-the main group of economic consultants of the President of the White House of the White House of the White House of Economic Council, to blame the previous democratic administration for adding it to deficit and causing inflation.

The official said Trump has quickly moved to “restoring financial rationality.” The official said that the low interest rates in the United States in recent weeks were a sign of market confidence in Trump's policies. As an additional evidence, the official indicated a decrease in the term premium, which measures what investors impose on keeping debt for a longer period of time. The recovery in the prices of American bonds after the election of Trump in November, investors sold government bonds amid fears that his policies – including tax cuts and definitions – would exacerbate the United States' deficit and put the economy on an inflationary path. But since mid -January, a few days before Trump's inauguration, cabinet revenues have decreased for 10 years significantly. The return has decreased for 10 years, which moves back to the price, to about 4.2 %.

The term Premium, which partially reflects the feelings of investors about the future size of religion, also decreased, but it remains firmly in positive lands after being negative for years.

However, some investors argue that the returns have fallen not because of optimism about the American financial path, but because Trump's policies have increased economic uncertainty – which leads to consumer confidence and business, and lead to talking about slower or negative growth.

Some investors said that these concerns also appear in stock prices. The S& P 500 index in the United States has decreased to more than 4 % since Trump returned to the White House on January 20, compared to a decrease of approximately 1.3 % of the MSCI index of stocks in more than 40 other countries. “A rise in uncertainty in politics” may lead to a soft correction in the economy.

“The promises of the campaign are one thing, but Satan is in the details when it comes to making policies,” he added.

Whatever the cause of the recent market movements, the Trump administration needs to persuade investors to measures to provide debts under control. Otherwise, the disappointment invested can resume the sale of bonds, increase borrowing costs and give the administration's ability to follow its agenda.

“The price of bonds, like the price of any financial assets, is determined, over time by the basics, and the budget deficit is to a large extent most important,” said Samarz.

Mar-A-LagoCord

In a paper in November, economist Stephen Miran, chosen by Trump, Speaker of Economic Advisors, has caused the possibility of Trump to use the threat of customs tariffs and lured American security support to persuade foreign governments to switch treasury property in the low -century bonds.

Miran, who held the position of adviser to the Treasury Department during the first period of Trump, wrote the newspaper before his candidacy while working as a senior strategic expert at Hudson Bay Capital Management, an investment management company. It has not been confirmed yet.

The idea was part of a series of measures to increase the American competitiveness that Miran called “Mar-Ago Accord”, after Trump's residence in Florida. Miran refused to comment on Reuters, pending his confirmation.

Julian Brighten, President of Macro Intelligence 2 Partners, a research company, who may lead to approximately $ 100 billion in interest costs annually, estimates Julian Bardin, President of Macro Intelligence 2 Partners, a research company.

While this will be a small part of the debt burden. The audience's debts are expected to reach $ 52 trillion by 2035 from 30 trillion dollars this year, according to the latest budget office expectations in Congress.

But concerns about more compulsive debt bodies may lead to the sale of pressure on the treasury, which causes higher returns, some investors and economists said – increasing the risk associated with the world's most secure assets in the world.

“Maybe they can press some people to buy bonds,” Sames said. “But it is likely that you will make others feel nervous than carrying origins supported by political pressure, which tends to not work forever.”

The NEC official said that the Miran paper is discussing a wide range of potential options without defending any of them, and Trump was not only able to say what he adopted.

James Bianco, president of Bianco Research, said that Trump has already adopted some measures that Miran referred to, including the use of customs tariffs as a feedback of security agreements and the creation of a wealth of sovereignty.

“I started to realize many of the things in that paper,” said Bianco.

Expect what is unexpected

Another idea that the administration floats is the “Gold Card” program, which is said by the Minister of Commerce, Howard Lottenic, that it could help reduce the deficit. Trump said that the residence plan has the ability to collect trillion dollars and help in paying US debt.

Expectations were met with some doubts. Some immigration and wealth consultants say it is unlikely to raise a great influx of wealthy global investors because it will open their global income to American taxes.

An additional topic of market speculation is the idea that the administration can try to benefit from the gold stock in the country.

In the current market prices, the gold that was held in Fort Nox, Kentucky and other sites of about 758 billion dollars, but it is estimated at only $ 11 billion on the public budget of the Federal Reserve due to the 1973 law that set its price, TD Securities, an investment bank, on February 20.

Trump said that they wanted to confirm that gold has not accelerated a cellar. Bessent talked about the liquidation of “the assets side in the American public budget of the American people”, but said that the re -evaluation of gold was not what was going on in his mind.

Ed Mills, an analyst at Raymond James, a financial services company, said Trump may depend on his experience as a real estate developer in any attempt to reform the country's debts.

“Trump spent his life in reorganizing and reorganizing Trump's debts,” Mills said.

Trump, by telling him, almost went bankrupt in 1990 and was forced to demand dozens of banks to change the conditions on their loans and tolerate some of his debts – the event that he held as evidence of his negotiating skills and fatty thinking.

“With Donald Trump, you should expect what is unexpected,” said Mills.

(Participated in the reports of David Barbosia; edited by Barretush Bansal and Daniel Flynn)