Bloomberg strategist Simon White warns: US fiscal fundamentals are more fragile than France's, and US Treasuries face a greater test.
Simon White points out that while France's budget crisis is escalating and its sovereign bond spreads are widening, the US's fiscal fundamentals are actually more fragile. Data shows that the US government debt-to-GDP ratio is 122% and its fiscal deficit-to-GDP ratio is 5.6%, both higher than France's 113% and 5.1%. Furthermore, the US's annual interest expenditure has already exceeded $1 trillion. He believes that if the US fails to advance fiscal consolidation in a timely manner, the dollar's reserve currency status and the "safe-haven" attribute of US Treasuries could face greater challenges.
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