US debt is still a buy, not a sell: Manish Singh

economictimes.indiatimes.com:

«What it has done, it has shone a light on the fiscal deficit position, which is true because I think if you are going to run a fiscal deficit of 6% in peacetime or economic expansion time, then that does not bode really well,» says Manish Singh, Crossbridge Capital.What do you think because there has been a bit of dismissal of the new ratings downgrade by the Biden administration as well, some have called it out-dated that it defies reality. Do you hold the same opinion as well?I do. I think the timing is just plain dubious because if anything, a lot of this thing has been sorted out over the last few months.

And the fact that the debt ceiling has been suspended until January 2025 just tells you that over the next 17 to 18 months, you do not have any risk of debt not being paid. If you look at the reverse repo facility at the Fed that has $2 trillion on which the Fed is paying 5.4% interest. So even if the short term yield on treasury bills were to rise, if more debt issuance comes in, which it will then it can easily be bought by the cash that is lying around at the Fed from money market funds and other investors, other commercial bank deposits will also follow suit.

So I just do not see any short term risk. What it has done, it has shone a light on the fiscal deficit position, which is true because I think if you are going to run a fiscal deficit of 6% in peacetime or economic expansion time, then that does not bode really well. However, I will just point out one final thing, that the aggregate level of debt itself or the interest payment cost itself is not a problem.