🚨📉 Election Risk: Market Crash Ahead?

With the U.S. elections on the horizon, analysts at Presto are cautioning that it could trigger a "Minsky moment," potentially leading to a bond market collapse. The firm’s experts, Peter Chung and Min Jung, argue that the fiscal policies of both candidates—Donald Trump and Kamala Harris—are exacerbating the risk, driven by unsustainable debt levels and fiscal extravagance. They warn that rising U.S. debt could lead to investors demanding much higher returns to fund government spending, causing bond yields to soar and prices to fall.

Echoing this concern, billionaire investor Paul Tudor Jones, known for his accurate market predictions, has turned bullish on bitcoin, gold, and commodities as protection against what he believes is an inevitable surge in inflation. In an interview with CNBC, Jones emphasized his strategy of holding "zero fixed-income" securities, expecting the bond market to falter under rising interest rates and inflation pressures.

Jones believes the Federal Reserve will be forced to continue cutting rates to support the economy, following a historical trend where governments inflate away their debt burdens. Presto’s analysts also highlighted that the rising Treasury yields and the elevated credit default swap rates are signals that markets are already pricing in higher risk, aligning with Jones’ perspective.

They further pointed out that the proposed BITCOIN Act of 2024, currently under Congressional review, could help stabilize the U.S. debt and financial system in the long term. However, the lack of attention to the debt issue from either presidential candidate suggests that the issue remains off the radar for most voters. Meanwhile, bitcoin, although down from its all-time high, continues to show resilience in the current economic climate.

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