*By Bridgette Webb*
Investors overseas are losing their appetite for U.S. debt.
Foreign buyers are reducing their purchases of Treasuries and now own just over 40 percent of the debt outstanding, the lowest mark in 15 years. And if demand dries up, that could lead to higher interest rates ー something that can clearly spook investors.
While it may be easy to blame the trade war for the drop, Daniel Kruger, a reporter for The Wall Street Journal, said there's another culprit.
"It's not so much the trade war as the stronger dollar," Kruger said Wednesday in an interview on Cheddar.
"It has to do with the Federal Reserve, which has been aggressively raising interest rates."
Fed officials have raised rates three times this year, most recently, in September to a range between 2 and 2.25 percent. Experts believe the central bank will do it again in December.
President Trump has been an outspoken critic of Federal Reserve Chairman Jerome Powell's decision to stay the course of rate hikes. The president recently claimed that Powell looked "like he's happy raising interest rates," and that he was endangering the U.S. economy.
China owns over $1 trillion of U.S. debt ー a point of concern that may grow even more worrisome as trade tensions continue. If the country dumps its holdings, that could spark a drop in bond prices and a consequent spike in borrowing costs.
For Kruger, it's not an immediate issue, but it may pose a more serious long-term risk.
"If China were to try to use its Treasury holdings as a diplomatic tool as a way to strike out at the U.S., they probably wouldn't tell us about it," he said.
"And the data that we get on foreign holdings of treasuries kind of lags. It would be a couple of months before we noticed."
Lab-created diamonds come with sparkling claims: that they are ethically made by machines running on renewable energy. But many don't live up to these claims or don't respond to questions about their electricity sources, and lab diamonds require a lot of electricity.
Geoff Freeman, president and CEO of the U.S. Travel association, explains why other nations are outcompeting the U.S., and the innovations that would put American back on top.
Tony Drake, founder of Drake & Associates, breaks down the latest CPI report, why ‘inflation is still trending down,’ and why the Fed doesn’t want to cut rates too soon.
Make sure your love don't cost a thing this Valentine's Day to any scammers. Note: we're not talking about your partner that didn't do the dishes after saying they would.
Landing founder and CEO Bill Smith shares how the company’s new Nomad pass and partnership with Frontier Airlines allows subscribers unlimited airfare and accommodations.
The pandemic yielded government financial support and (eventually) a surprisingly strong job market — but racial wealth disparities grew. Why is it so difficult to close the wealth gap?
Plenty of retailers and suppliers are reducing the variety of their offerings to focus instead on what they think will sell best. Many businesses have decided less is better, justifying their limited selection by asserting shoppers don’t want so much choice.
Joe Pompliano, author of the Huddle Up newsletter, breaks down the biggest moments from Super Bowl LVIII, from potentially record-breaking viewership to Taylor Swift’s highly anticipated appearance.
