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The Us Fiscal Outlook & China’s Role in the Us Treasury Market

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The US Fiscal Outlook & China’s Role in the US Treasury Market
-Fixed income project

key words

Written by
Gong Li 1155019071
Jiang Peng 1155038183
Yang Mengdi 1155020855
Zhang Yiwen 1155010794
Zheng Qianfei 1155038175

Written by
Gong Li 1155019071
Jiang Peng 1155038183
Yang Mengdi 1155020855
Zhang Yiwen 1155010794
Zheng Qianfei 1155038175

Executive Summary 1
1, The US Fiscal Outlook 3
-Recent and historical fiscal outlook 3
-The US debt ceiling and recent crises 4
-Financial cliff (2013) and its impacts to the US economy 5
-The US fiscal future 6

2, Fiscal Situation and Treasury Market 9
-The role of US department of the treasury 9
-The role of the Federal Reserve 9
-The US treasury market 10
-The Fed, the interest rates, the QE and the taper 12
-The prediction of the future interest rate 13
-Summary 14

3, China’s involvement in the US Treasury market 15
-China’s Ownership of US Treasury Securities 15
-Reasons of China’s preference for the US Treasuries 16
-The Symbiosis between China and the US in Terms of US Public Debt Holdings 18
-Our Suggestion on China’s Future Position in the US Treasury Market 20
References 22

Executive Summary
The state and local governments continue to face fiscal challenges in the short- to medium-term term. According to the Government Accountability Office, the fiscal situation in the US has just returned to the level preceding the year of 2007, but however, it is projected that the fiscal situation will deteriorate again over a prolonged period over the next 40 years until 2060. Historically, the US has always sorted out ways to keep fiscal deficit under control, but at present, it faces a dilemma in which it has to decide…...

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