Our unbounded Schaudenfreude over Tim Walz getting his long overdue comeuppance at the hands of the Trump campaign and national media, is actually complemented nicely by the results of the most recent Treasury bond auction, $42 billion in ten years. That is a very large ten-year auction and buyers did not like what they saw. The final interest rate was 3.96% and today the yield on the ten-year is hovering right at 4%. This is up from the last auction and was up significantly from the rate the Treasury department wanted to pay. Demand was also weak. I continue to believe strongly in my thesis that it doesn’t matter what the Federal Reserve does, buyers’ will control rates now. The debt is out-of-control and the amount that has to be sold is humongous. Buyers have accepted somewhat lower rates on very short-term paper that gets rolled over quickly–90 day bills, 2 year notes, even 3 year notes. But for ten years of risk that the US can’t get its finances in order, buyers are demanding continuing high rates. There is a 30 year bond auction today, and I would expect a similar buyer reaction. (ZH Post)
Meanwhile yesterday’s report on credit card debt was further indication that most consumers are close to tapped out, which will have a substantial effect on the economy, as credit cards are used for much of retail buying. I am looking forward to a late summer and fall perfect storm of economic disaster for the Dems–bad news after bad news, exacerbated by worsening geopolitical risks in the MidEast, Ukraine and China. No party could deserve this more.
Update: As expected today’s 30 year bond auction was also “disappointing”. The interest rate paid, at 4.3% was higher than desired and the demand characteristics underwhelming. And the ten year bond is now over 4%.
Our national debt exceeds 35 trillion dollars, yet we have not fully realized the benefits promised by socialism.