Billionaire Ray Dalio calls the debt ceiling deal “not good enough,” warning that it does not address the main issue at hand. “Dealing with the problem of adding too much to a pile of debt that is already too large: Grade D. It won’t make much difference,” Dalio said in a tweet Tuesday. Though a default was narrowly avoided, there is a heightened risk that the economy slips into a recession. “Even if … the debt limit is raised at the last minute, the current risks in the banking system will be amplified,” said Morgan Stanley’s Seth Carpenter. By encouraging businesses and households to invest in U.S. debt while also sucking money out of the financial system, banks may be severely strained by the deal. In other news, a WGC survey found that 24% of central banks plan to buy more precious metals in the next 12 months. The survey noted that gold was found attractive due to its “historical position”, performance during crises, and status as an inflation hedge, among other reasons.

Markets Insider/George Glover
Billionaire investor Ray Dalio gives the US debt deal a D grade, warning it doesn’t solve the main problem

Ray Dalio isn’t impressed by the debt-ceiling deal – and says the tentative agreement doesn’t address the problem that the heavily indebted US government keeps borrowing more and more money.

The billionaire investor and Bridgewater Associates founder tweeted on Tuesday that President Joe Biden and House Speaker Kevin McCarthy’s deal was “the best one could expect, though not good enough.”

“Dealing with the problem of adding too much to a pile of debt that is already too large: Grade D,” he added. “It won’t make much difference.”

Continue reading, here.

Politico/Victoria Guida
Debt ceiling deal could fuel Biden economy’s problems

Treasury Secretary Janet Yellen is warning of the “catastrophic” impact that a debt default would have on the U.S.

But even if Washington averts disaster and raises the debt ceiling, the nation’s banks — and President Joe Biden’s economy — are likely to feel some pain.

Financial institutions, already reeling from the stunning failure of three regional lenders since March, are likely to face a drain on deposits and less cash in the banking system as a whole as Yellen’s Treasury suddenly cranks up borrowing. That will squeeze their ability to lend to businesses and consumers, especially coming on top of pressure the banks are feeling from the Federal Reserve’s aggressive rate hike campaign.

You can read the full article, here.

Kitco News/Anna Golubova
Nearly a quarter of central banks plan to buy more gold as divide between emerging and advanced economies grows, says WGC survey

Central banks remain very keen on boosting their gold reserves, with 24% saying they plan to buy more precious metal in the next 12 months, according to the World Gold Council’s (WGC) 2023 Central Bank Gold Reserves Survey.

“Following a historical high level of central bank gold buying, gold continues to be viewed favourably by central banks as a reserve asset,” said the survey that polled 59 central banks between February 7 and April 7.

Financial market concerns, planned purchases of domestic gold production, and portfolio rebalancing are driving the additional buying.

You can read the full article, here.

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