What does the decline in US debt mean?
The decline in US debt illustrates two events: First, a large amount of funds to buy US debt leads to a decline in the yield of US debt, which is mainly caused by the high demand for safe haven of global investors, who try to protect their investments from interest rate risks. Second, the decline in US debt is caused by policy factors, that is, the Fed continues to cut interest rates to stimulate the economy, resulting in a decline in the yield of US debt and a decrease in interest income of investors. In addition, it should be noted that most crises in history have something to do with the decline of US debt, especially after the upside down.
American debt is a national debt issued by the United States, so if there are no serious problems in the United States or the world, then the yield of American debt generally fluctuates around a value, that is, more people buy, American debt falls, fewer people buy, and American debt rises. In the past 50 years, the yield of two-year US bonds was higher than that of 10 years before each recession, which led to the past five recessions. Therefore, the decline in US debt is not a good thing. It is often a precursor to risk, reminding us to pay attention to positions.
In this regard, every round of sharp decline in US debt is the most obvious wave of buying, and this wave of buying is caused by investors' crazy hedging. For those who held American debt earlier, selling American debt is undoubtedly cutting meat. For investors who enter American debt from the OTC market, the result of unanimous looting is that the income is almost zero.