– US needs to borrow almost $300 billion this week alone

– This is the largest debt issuance since 2008 financial crisis

– Trump threatens trade war with its biggest creditor – China

– Bond auctions have seen weak demand due to large supply and trade war concerns

– $20 trillion mark reached in early September 2017; $1 trillion added in just 6 months

– US total national debt level now exceeds $21.05 trillion and is accelerating higher

– U.S. debt and dollar crisis coming which will propel gold higher (see chart)

Source: USDebtClock.org

This week the US has gone cap in hand to the bond markets to sell nearly $300 billion of US debt while at the same time threatening a trade war with its largest creditor China. This is despite it being the largest debt issuance since the 2008 financial crisis.

Trump has added $1 trillion in new debt in just over six months. This trillion dollar increase has only  happened once before – at the height of the 2009 global financial crisis.

To give a sense of perspective of how huge $300bn issuance in one week is, it is the total amount of US debt when JFK was President. The U.S. national debt appears to be increasing parabolically and yet much of the media remains silent on the real risks this poses to the dollar, financial markets and the U.S. and global economy.

Source: Goldchartsrus.com

The U.S. government is in need of another $300 billion this week due to Trump’s grand tax and spend policies. The recent cut in taxes means there is reduced federal revenue and therefore the government must borrow more in order to make ends meet. The money will be used to refinance the current maturing debts and to finance new.

The sale will include $109 billion of coupon-bearing paper (debt featuring a maturity of more than a year) and $185 billion of bills.

Will Trump’s creditor China be interested?

Asking the market for $300bn when you’re picking a fight with some of the world’s biggest economic powers is bad timing to say the least. This is particularly the case when one of those economic powers is China, by far the largest holder of Treasuries.

Currently around 46% of US debt is owned by foreign entities, China’s holding accounts to $1.18 trillion of this. In light of Trump’s recent trade tariff placed on the Asian superpower, markets are unsure if US debt’s biggest fan will be coming to the debt waterhole for more.

When trade tariffs and wars were first mentioned China said it would respond to any measures by fighting a trade war ‘to the end’. China’s ambassador to the United States told Bloomberg ‘we are looking at all options’ when asked if the country would scale back purchases of US debt.

 

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This isn’t news that China may be losing interest in propping up the US economy. In early January Bloomberg reported that, ‘Senior government officials in Beijing reviewing the nation’s foreign-exchange holdings have recommended slowing or halting purchases of U.S. Treasuries.’

Given how heavily invested China is in just one class of US debt, it would not be surprising for the country to consider rebalancing their portfolio. Strategically now might be considered a wise time to do so.