*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."
Cheddar News' Need2Know is brought to you by Securitize, which helps unlock broader access to alternative investments in private businesses, funds, and other alternative assets. The private credit boom is here and the Hamilton Lane Senior Credit Opportunities Fund has tripled in assets under management in just six months from November 2022 through April this year. Visit Securitize.io to learn more.
Americans picked up their spending from October to November as the unofficial holiday season kicked off, underscoring that shoppers still have power to keep buying.
The average long-term U.S. mortgage rate dropped below 7% to its lowest level since early August, another boost for prospective homebuyers who have largely been held back by sharply higher borrowing costs and heightened competition for relatively few homes for sale.
Mortgage rates have dropped below 7% for the first time since the middle of August.
Taylor Swift grossed nearly $2 billion this year, according to Billboard.
A study from US News and World Report has found the most affordable place to retire is in Ohio.
Millions of households could see higher internet costs next year as the affordable connectivity program could end.
Viveca Chow, NYC lifestyle expert, spoke with Cheddar News to provide tips on how to have some festive fun in the city on a budget.
Apple announced that it's releasing an iPhone security update to prevent attackers from acquiring users' private passcodes.
As the new year approaches, many people are looking to find a job with a higher salary or are planning to ask their current boss for a raise. Taliya Bashani, real estate attorney and negotiation expert, joined Cheddar News to provide tips on how to properly and better negotiate better financial terms.
