In a recent CNBC interview, Presto analysts Peter Chung and Min Jung warned that the upcoming US election could catalyze a significant correction in the bond market. They highlighted that over the past quarter-century, the ratio of US debt to GDP has escalated dramatically from 40% to a concerning 100%. Projections suggest this figure may soar further, potentially reaching between 124% and 200% within the next few decades. Amid this backdrop, the analysts are optimistic about Bitcoin, gold, commodities, and Nasdaq equities, viewing them as viable hedges against impending market turbulence.
Chung and Min suggested that the election cycle could trigger a “Minsky moment,” where heightened awareness of financial vulnerabilities prompts the bond market to demand greater compensation for deficit financing. The electoral promises from candidates like Donald Trump and Kamala Harris have exacerbated the risks of a bond market downturn. They argue that inflation may emerge as a crucial mechanism for addressing these challenges. Furthermore, they see potential relief in the 2024 Bitcoin Act, currently pending congressional approval, which could play a pivotal role in stabilizing US debt and, by extension, the global financial landscape.