Deutsche Bank poll: 80% see U.S. deficit path ending in crisis or QE

Investing.com -- A flash poll by Deutsche Bank (ETR:DBKGn) found that 80% of respondents believe the U.S. deficit trajectory is unsustainable and will ultimately result in either a crisis or central bank intervention.

The survey, which gathered 450 responses, asked participants to react to Moody’s projection that the U.S. deficit will be just under 9% of GDP by 2035. 

Only 20% of respondents saw a benign outcome, with 5% expecting strong growth and 15% believing markets would absorb the deficits without disruption.

“80% felt there would be a more event-driven outcome, with 54% suggesting some kind of crisis would force politicians to rein in the deficit by then, with 26% expecting QE to be required to help fund the deficit,” Deutsche Bank said in its note.

The firm added that market moves didn’t appear to influence sentiment. “We also looked at whether the significant rally back in rates impacted the answers over the course of the past 24 hours. It didn’t,” the analysts wrote. “There was remarkable consistency in the responses over the survey period.”

The results reflect growing skepticism over the long-term sustainability of U.S. fiscal policy, with Deutsche Bank noting that “80% effectively believe the U.S. is on an unsustainable debt path.”

Still, the timing of any potential reckoning remains uncertain. A Deutsche Bank analyst stated: “I suspect there would be no consensus around when this will become a serious market issue. Maybe that’s a poll for another day.”