Deficits, Debt and Bonds

There was a not bad three year Treasury debt sale earlier this week.  Shorter term notes are doing okay because the rates are quite high.  Anything longer term, not so much, like yesterday’s ten-year note.  The interest rate paid was higher than in the last ten-year auction, higher than the Treasury expected to pay, and demand indicators were weak.  It is going to be this way the rest of the year for anything with a ten-year or longer maturity.  (ZH Post)

And here is why.   In February, the US spent twice as much as it received in revenue.  We are on track for another $2 trillion deficit year.  The overall debt pile, much of which has to be regularly refinanced, just keeps growing.  One thing to note, that is very puzzling in a supposedly growing economy, is that revenues have flatlined, which spending just keeps rising.  It is an indicator of how weak the Bidementia economy is that it isn’t producing more taxes.  (ZH Post)

So far there is no serious effort, well, no effort at all, to rein in spending by Congress, but the day is coming when it will have to happen, and it is going to be very painful.