US real interest rates have reached +2%, triggering sell-offs in risk assets and precious metals, a pattern that has repeated multiple times. This dynamic is being cited as a symptom of fiscal dominance in the US economy.
Fiscal dominance refers to a situation where monetary policy becomes subordinate to government debt management needs, forcing central banks to keep rates low or intervene to support borrowing. The recurring correlation between rising real rates above 2% and asset price declines underscores this structural tension.
US Real Rates Hit +2% Again, Pressuring Risk Assets and Precious Metals Amid Fiscal Dominance Concerns
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