Investors in U.S. Treasuries are funding the greatest share of America's government debt than at any time since December 2003 – and, depending on President Donald Trump's priorities, that could be good or bad news, Forbes.com reported.
"More trade barriers without compensatory pro-growth policies may lead U.S. investors to put their money in Treasuries rather than more productive investments," Forbes.com writer Daniel Kruger argued.
"That would be a bad sign for growth."
Kruger explains the U.S. recovery after 2009 saw a demand for imports of cheap goods made in China, "a function of consumer growth and globalization," according to Jim Vogel, an interest-rate strategist.
And China helped fund consumer spending by plowing its profits in Treasuries, becoming one of the largest creditors to the United States.
But consumers were not saving during 2004-2007; annual growth today, on the other hand, is only two percent, but consumers have spent less and are saving more, Kruger wrote.
That, Kruger writes, has helped lead to a drop-off in foreign holdings of Treasuries, which China accounts for almost in its entirety.
And it worries investors about Trump's policies.
"He's going to be spending his time on the healthcare stuff, fighting with the media, and getting his cabinet confirmed," Andrew Brenner, a trader with NatAlliance Securities, told Forbes.com.
"People are going to be somewhat disappointed" by how long it will take to push forward pro-growth policies.
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