Recently, the United States Treasury yields have increased at an alarming rate. Meanwhile, an analyst has stated that this could spark a debt crisis in America.
Stock And Crypto Economy Crumbles As Traders Await The Fed’s Next Decision
This week, the major price indexes on Wall Street were in the red region. Also, cryptos and precious metals such as silver and gold dropped significantly.
The total crypto market cap has also lost more than 4.2% in the last 24 hours. The market cap initially crossed $1 trillion last month and is struggling around the $940.10 billion region.
On Tuesday, the flagship currency, BTC, dipped by over 5.87% and dropped below $19K. As of the time of writing, the currency is trading around the $19k region.
Also, Ethereum, the largest altcoin, has dropped by more than 8.7%. As of the time of writing, the token is trading at around $1,638, up by 8.67% in the past 24 hours.
Meanwhile, Precious metals were not left out of the market crisis. Gold’s Nominal USD value per ounce dropped by 0.50%. Silver has also dropped by over 0.74%.
In addition, market traders and strategists are waiting to see what the US Fed will do on September 21st. The Fed has been increasing interest rates since the inflation crisis began.
Most analysts believe the Fed might increase the interest rate again. According to Tom di Galoma, MD of Seaport Global Holdings, inflation will not dissipate any time soon if interest rates keep rising.
US To Fall Into Debt Crisis – Michael Gayed
Apart from the US Federal Reserve, Luis de Guindos, the European Central Bank, and Christine Lagarde would likely increase Europe’s benchmark lending rate this week. This is due to the high rate of inflation in Europe amid the high gas prices.
Meanwhile, Michael Gayed, a portfolio manager and publisher at Lead-Lag Report, believes the United States could fall into a debt crisis. While speaking with Kitco News, the analyst commented on the ongoing economic crisis.
Gayed said the higher the Treasury yields, the more difficult it would be for nations to abide by debt obligations. Furthermore, Gayed stated that Wall Street had recorded several losses in 2022. The last time the financial market witnessed such declines was in 2008.
According to Gayed, the increasing Treasury yields and high inflation could lead to a catastrophic event in the market. In the end, the country can either expect hyperinflation or a sovereign default crisis.
Additionally, Gayed said the impending financial crisis he had foreseen would bring about an authoritarian style of government.