The U.S. budget deficit grew 8% to $1.833 trillion for fiscal 2024, the highest outside of the COVID era, as interest on the federal debt exceeded $1 trillion for the first time, the Treasury said on Friday. The shortfall amounted to 6.4% of gross domestic product, up from 6.2% a year earlier.
A fiscal think-tank, the Committee for a Responsible Federal Budget, recently estimated that Republican Donald Trump's plans would pile up $7.5 trillion in new debt, more than twice the $3.5 trillion envisaged in Democrat Kamala Harris's proposals.
Shifting odds on post-election Congressional math, however, may have much to do with how any of those fiscal plans pan out.
At 4.12%, U.S. 10-year Treasury yields hovered close to 2-1/2 month highs on Monday even with another quarter-point Federal Reserve interest rate cut still near fully priced for next month.
With the Atlanta Fed's real-rime "GDPNow" model indicating growth in excess of 3.4% and U.S. economic surprise index at its most positive in six months, the early Q3 earnings season is impressing again with 83% of the 71 S&P500 firms reported beating forecasts.
While the blended annual profit growth estimate for the 500 has dipped to 4% from the 5% expected pre-season, according to LSEG data, revenue growth is holding to expectations and a return to brisk double-digit earnings expansions is still forecast for next quarter and right through next year.
A heavy diary of updates this week spans industrial, defence, energy and financial sectors but Tesla's quarterly likely grabs many headlines mid-week.
Overseas, attention was back on China on Monday as the latest official lending rate cuts there were mostly expected and met with a shrug by markets. The one-year loan prime rate was lowered by 25 basis points to 3.10% from 3.35%, while the five-year LPR was cut by the same margin to 3.6% from 3.85% previously.
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