🚨 Urgent
The US government recorded a budget deficit in January of $94.6 billion, compared to expectations of $94.4 billion. This means the deficit is higher by $200 million.
The difference is small, but the important thing is its impact on the market, bonds, and interest.
Bonds:
The deficit means more bond issuance, which increases supply.
The market demands higher yields to absorb it.
Interest:
Continued deficit supports long-term yields remaining high, which hinders
the Federal Reserve from quickly lowering interest rates.
Stocks:
The impact is direct and limited, but indirectly through bond yields and interest.
