5-Chart Friday (10/9/20)

By Charlie Bilello

09 Oct 2020

5 charts from the past week that tell an interesting story in markets and investing…

1) $27 Trillion and Counting…

US National Debt has crossed above $27 trillion for the first time. A year ago it was below $23 trillion.

As a percentage of economic output (GDP), our national debt has never been higher, steadily increasing over the past 40 years…

Where will the national debt be a year from now? From a poll I did this week, most people said much higher…

2) Unbalanced Budget

The fiscal year for the US Treasury ended in September, showing a budget deficit of over $3.1 trillion.

At over 15% of GDP, this was the largest since 1945 (World War II Spending).

It was also the 5th consecutive year showing an increasing budget deficit, which is interesting because the prior 4 years were during an economic expansion.

There seems to be no concern these days about rising debt and deficits. Both major political parties are in agreement, saying we should borrow trillions more from our future to spend today.

3) Rising Rates?

Speaking of trillions more in debt, long-term bonds yields may be starting to respond to the coming increase in supply. The 30-Year US Treasury Yield hit its highest level since June this week.

Created in YCharts

At 1.57%, this is still a negative real yield as it remains below the expected 30-year inflation rate (1.71%). 2020 is the first year to see negative real yields in 30-year bonds since 1980.

4) Winning the Trade War?

Remember the trade war? We haven’t heard much about it this year.

Meanwhile, the US Trade Deficit widened to $67 billion in August, the largest deficit since 2006.

Created in YCharts

5) Covid Waves Continue

The second wave in Europe continues to trend higher.

While cases are at new highs or approaching their highs from the Spring, deaths remain well below March/April peak levels. The reason: much more testing today which is picking up milder cases and skewing younger.

In the US, COVID-19 Hospitalizations are starting to move up again, a sign of increasing spread.

We could be seeing the start of a second wave in New York, which is observing its highest new case levels since May. Testing in NY is up significantly, however, meaning a case today is not the same as a case in the Spring. As compared to earlier in the year, there are many more positive cases today with mild symptoms and within the younger population. This will lead to a much lower death rate even if cases continue to rise.


And that’s it for this week. Thanks for reading.

Have a great weekend everyone!


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