This round of interest rate hikes in the United States began in March 2022, when the inflation situation was severe and the Federal Reserve started the process of raising interest rates to fight inflation. Since March 2022, the Federal Reserve has made several aggressive interest rate hikes, with the highest cumulative rate hike reaching 525 basis points, raising the target range of the federal funds rate from 0.25%-0.5% to 5.25%-5.5%. The pace and magnitude of this rate hike are rare in history. As of July 2025, the interest rate remains between 4.25% and 4.50%.


People's financial pressure has risen to the highest point since the epidemic

Despite Wall Street's propaganda of economic resilience and stock market gains, ordinary Americans are in deep financial trouble. According to data from LegalShield, a U.S. legal consulting firm, the Consumer Stress Legal Index (CSLI) rose 4.4% in the second quarter; the foreclosure index jumped 13.3%, up nearly 28.9% from the same period last year. The higher the index, the more cases in which banks and other lending institutions are facing repossession of houses due to borrower defaults in the real estate market, the largest annual increase in three years; consumer financial consultations surged 8.7%, and the index has risen to its highest level since the epidemic shutdown in November 2020, reflecting problems such as foreclosures and mortgage payment difficulties caused by rising debts. According to data from the New York Federal Reserve, household debt increased by $167 billion in the first quarter of 2025. LegalShield executives called its data a leading indicator, indicating a sharp increase in consumer debt.

Multiple factors make it impossible to relieve stress

Unlike the pandemic period in 2020, there is no sign of a reversal in the current financial pressure. Back then, the Federal Reserve's interest rate cuts and government stimulus checks quickly relieved the pressure, but now the huge appropriations bill has little effect, and even if the interest rate cut may come in September, it will hardly be a panacea. Credit tools such as "buy now, pay later" have increased household pressure, and the Trump administration's global trade war and import tariffs have pushed up inflation, further worsening the situation for consumers. Although Trump has proposed considering using tariff revenue to issue tax rebates, there is no official stimulus plan yet, and financial pressure continues to increase. ?

Economic outlook casts a shadow of uncertainty

The severe challenges facing consumers have heightened economic concerns and uncertainty is likely to persist. Rising inflation is expected to lead to reduced consumption and slower economic activity, creating a stagflationary environment that is favorable for gold. Market analysts believe that the inflationary pressures brought about by Trump's trade policies, coupled with problems such as high consumer debt, will make the economic outlook full of uncertainty. Despite the expectation of interest rate cuts and tax refund proposals, it is difficult to solve the current consumer financial dilemma, and the risk of a slowdown in economic activity is still increasing.

After the passage of the "Big and Beautiful" bill, the US debt crisis worsened.

The U.S. Treasury Department has significantly raised its quarterly borrowing forecast to replenish its cash reserves. Due to the debt ceiling, the U.S. Treasury Department has significantly raised its federal borrowing forecast for this quarter to $1 trillion. The U.S. Treasury Department issued a statement on Monday (July 28) saying that it expects net borrowing to be $1.01 trillion from July to September, higher than the $554 billion forecast in April. The government had to cut bond issuance in the first half of the year to avoid hitting the debt ceiling. Since Congress raised the debt ceiling by $5 trillion earlier this month, the Treasury Department is accelerating bond issuance to rebuild cash reserves. As usual, the Treasury Department's April estimate did not take into account the debt ceiling factor. At that time, it assumed that the cash balance at the end of June would be $850 billion, but it was actually only $457 billion. The Treasury Department said that without considering the lower-than-expected cash balance at the beginning of the quarter, the borrowing estimate for this quarter is $60 billion higher than the amount announced in April.

Big and beautiful bill may push up inflation

The "Big, Beautiful" bill cuts benefits, including Medicaid and food stamps, increasing the burden on the public. Its bias toward traditional energy sources and elimination of new energy credits could lead to a surge in electricity prices in 2027. US tariffs are driving up the prices of imported goods. While tax exemptions are offered to service industry workers, they are unlikely to offset the impact of rising energy and food prices. The bill will also significantly increase the deficit, shifting the burden onto taxpayers.

Trump urges rate cuts, Fed chairman to be replaced soon

U.S. Treasury Secretary Benson said on Monday (July 28) that the White House will begin interviewing candidates for the next Federal Reserve Chairman this fall. The term of current Chairman Jerome Powell will end in May 2026. Trump's call for the Federal Reserve to cut interest rates is very urgent, mainly because of the severe debt situation in the United States. After the passage of the "Big and Beautiful" bill, it is expected that about $3.3 trillion of federal debt will be added in the next 10 years. If interest expenses are included, the scale will be even larger, and the U.S. national debt will reach $36.2 trillion. In the current high interest rate environment, the total interest cost of the U.S. government debt has reached $921 billion in the first nine months of fiscal year 2025. Trump hopes to reduce the interest expenses of government debt and ease the heavy debt repayment pressure by cutting interest rates. At the same time, the tariff policy he has implemented has pushed up inflation and increased the risk of economic recession. The interest rate cut can "offset" the inflation caused by the tariff policy to a certain extent, alleviate the risk of economic recession, avoid further deterioration of the economic situation, and stabilize his own support rate.

There are opportunities in bond investment <br/>Even if Moody's adjusts the US debt rating from Aaa to Aa1, US debt is safe and stable, backed by the credit of the US government, has both breadth and depth in the Treasury market, and has performed well in the past during market turmoil, and is still generally regarded by the market as a safe asset.

With the "Big, Big" bill exacerbating the US debt crisis, current bond investments should focus on the opportunities presented by interest rate cuts. If the September rate cut goes ahead as planned, it will reduce the US government's debt repayment pressure and cause the prices of existing bonds to rise rapidly.

For investors, subscribing to bonds at this time can lock in a higher face value return, and with possible interest rate cuts in the future, bond prices will rise, thereby obtaining considerable capital gains, which is an investment option worth considering.