US Spending Crisis: Interest Costs Are Out Of Control
In a Nutshell
US interest costs hit $118B in July alone and will reach $1.17T for the year, exceeding defense and Medicare spending, while the $432B July deficit reflects accelerating federal borrowing. The market rallied on a soft PPI print but faces resistance at prior highs with the VIX at record lows, signaling complacency. Trump faces separate lawsuits and calls for congressional probes over alleged market-moving information sold via Truth Social and family insider trading.
These notes were generated by AI and may contain inaccuracies.
Markets gapped up following the PPI report which came in at 4.7% versus the 4.9% expectation. Markets tend to celebrate positive economic news while ignoring negative reports, with the speaker noting this pattern as evidence of irrational market behavior. During the live trading session, traders went long on the favorable direction but began taking profits as markets traded sideways with signs of slight resistance.
The US government posted its largest July budget deficit in history at $432 billion due to accelerated federal spending. Interest on US debt rose $26 billion in July, reaching $118 billion for the month. This brings total interest expense for 2026 to $1.17 trillion, representing payments made solely on borrowed money.
Interest expense has officially surpassed both national defense and Medicare spending, meaning the US now spends more on interest payments than on funding the entire military or providing healthcare for seniors. Higher US Treasury yields directly increase the cost of servicing debt, which is why President Trump monitors Treasury yields closely. If Japan begins selling US Treasuries, yields would rise further, increasing borrowing costs.
President Trump has been sued in federal court over Trump Media selling advanced millisecond access to market-moving Truth Social posts through the Truth API, with subscribers paying up to $100,000 per month. The speaker emphasizes that if average citizens engaged in such market influence, they would face legal consequences, arguing everyone should be held to the same standard.
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