Mountain of Treasuries could boost interest rate on U.S. debt

11/3/2008 | Bloomberg

The next U.S. president may find foreign investors demanding a significantly higher interest rate on U.S. debt, as an exploding budget deficit pushes borrowing needs to an all-time high of $2 trillion, a Goldman Sachs analysis concluded. Analysts said they cannot see how demand for Treasuries could hold up once the "risk aversion trade" subsides. Treasury Secretary Henry Paulson may already be overwhelming buyers of U.S. debt with short-term obligations sold to finance the initial portion of the $700 billion bailout.

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