No presidential candidate apparently want to talk about the single-biggest issue facing our country–the massive debt pile, constantly growing via $2 trillion deficits year-after-year. But I will, constantly, because it is the biggest issue, and if we don’t start to solve the problem immediately, it will destroy our finances for a long time, if not forever. This week started with two poor US debt auctions, but even more startling is the US Treasury’s estimate of how much it will be borrowing, how much debt it will be issuing, in the next few months.
The size of these auctions this year is massive, unprecedented, and that is a factor in how poorly they are going. First up was a $69 billion two-year note. The interest rate was higher than projected at 4.13%, compared to 3.52% last month for the same security. Demand characteristics were weak as well. Then we had $70 billion in five-year notes. Also a higher than projected rate, 4.14%, compared to 3.52% last month. Demand wasn’t as bad as for the two-year, but wasn’t good. The bond buyers are not going for lower rates. As I have been saying for a long time, the Federal Reserve has lost control of interest rates, at least on US debt. (ZH Post)
Most frightening, however, was the Treasury release on expected debt issuance. In the third quarter, sold, i.e. borrowed, $762 billion dollars. In the fourth quarter, $546 billion is expected to be borrowed In the first quarter of 2025 the Treasury intends to sell $823 billion in debt. Expect many, many more very poor auctions and ongoing rises in interest rates that have nothing to do with inflation, other than adding to it as mortgage and other rates that consumers pay rise as well. (ZH Post)
