He added that when gold enters the turbulent month of 10, it may get better safe-haven demand. According to the news from Washington, Reuters, US President Biden said on the 4th local time that the federal government may break through the debt ceiling of $28.4 trillion, leading to a historic default, unless Republicans and Democrats jointly vote for raising the debt ceiling in the next two weeks. It is reported that Republican senators led by Senate Minority Leader Mitch McConnell have blocked the action of raising the debt ceiling twice in recent weeks.
US Treasury bonds: refer to the national bonds issued by the US Treasury on behalf of the federal government. According to the different issuance methods, American treasury bonds can be divided into three types: voucher treasury bonds, physical voucher treasury bonds and book-entry treasury bonds. According to the maturity of bonds, American treasury bonds can be roughly divided into three categories: short-term treasury bonds, medium-term treasury bonds and long-term treasury bonds. In addition to local investors, countries around the world can also buy US Treasury bonds. In previous years, the average issuance of US Treasury bonds was $500 billion to $600 billion per year.
American debt is guaranteed by national credit. Since the issuance, there has been no default event, which has the advantages of high liquidity and easy realization. It can be said to be the safest foreign exchange asset. Countries buy American creditors mainly for the preservation and appreciation of foreign exchange reserves. Taking China as an example, China has accumulated $3 trillion in foreign exchange reserves by exporting and attracting foreign investment. Since the RMB is not an international currency and cannot be freely exchanged internationally, many things in the world need to use foreign exchange reserves, such as importing oil and building the Belt and Road Initiative. It is worth mentioning that a large part of foreign exchange is deposited in the hands of the central bank.
At one extreme, the issuer can't repay the debt, which leads to a large-scale global sell-off, and the bond price plummets, which eventually leads to the bankruptcy and liquidation of the issuer, such as Greece. When a country issues bonds, it usually has certain macro significance, either for global financing to support the government's economic expenditure and daily expenditure, or for adjusting the balance of the domestic money market, making the money market develop more stably, and indirectly alleviating the sharp rise of inflation to some extent.