Juno markets 外匯:美债避险地位岌岌可危，凸显美元见顶观点

Core Viewpoint - The downgrade of the US credit rating has significant and far-reaching implications for the US economic outlook, affecting various sectors including fiscal, financial, and monetary policies [1]. Fiscal Analysis - The deteriorating fiscal condition of the US is a key reason for the credit rating downgrade, with the federal budget deficit for FY 2024 exceeding $2 trillion and total debt approaching $35 trillion [3]. - This massive debt burden increases the government's repayment pressure, leading to a loss of investor confidence in US Treasury bonds, which will require higher yields as compensation for increased credit risk [3]. - Singapore Bank predicts that long-term US Treasury yields will rise over time due to concerns about fiscal sustainability and changes in market risk appetite [3]. Yield Forecast - Singapore Bank maintains its forecast for US Treasury yields over the next 12 months, predicting that the 10-year Treasury yield will reach 5.00% [4]. - This forecast reflects concerns about the US fiscal predicament and the uncertainty in the global macroeconomic environment, which increases the upward pressure on yields [4]. - A breach of the 5.00% threshold for the 10-year Treasury yield could significantly impact global bond market pricing, corporate financing costs, and household borrowing rates, potentially triggering a new round of global asset allocation adjustments [4]. Financial Market Impact - The downgrade threatens the safe-haven status of US Treasury bonds, aligning with Singapore Bank's view that the "dollar has peaked" [5]. - Historically viewed as one of the safest assets, the downgrade diminishes the perceived security of US Treasury bonds, prompting investors to reassess their asset allocations [5]. - A potential decline in demand for US Treasury bonds may weaken the attractiveness of the dollar, leading to downward pressure on the dollar exchange rate as international capital could accelerate outflows from the US market [5]. Monetary Policy Implications - The high fiscal deficit and persistent inflation pressures severely limit the Federal Reserve's policy options [6]. - To maintain debt sustainability, the US needs to issue Treasury bonds at lower interest rates to reduce financing costs, while inflation necessitates a tightening monetary policy to stabilize prices [6]. - The credit rating downgrade exacerbates this policy dilemma, potentially forcing the Federal Reserve to keep interest rates elevated for an extended period, sacrificing short-term economic growth for long-term stability [6].