Only two significant debt auctions this week and they went off okay. The first was on the shorter term end, three years, so another huge issue–$58 billion. And while the interest rate paid was within expectations, the rate on issuance continues to be much higher than it was a couple of years ago and much higher than on any debt being rolled over, at 4.12%. The second was $39 billion in ten-year notes, with a slightly lower than expected interest rate result and good demand. Nothwithstanding these auctions, for most of the week, longer term US debt rates in the after-market have been rising, and I believe they will continue to do so as our massive deficits and debt have to be constantly fed with new issuance.
And another reason is that inflation isn’t really going away. Today’s consumer price index release was generally greeted as “oh that’s what we expected” and the Federal Reserve will keep cutting rates. But in reality, the headline CPI rose 3% month-over-month and 2.7% year-over-year. That is well above what the Federal reserve claims is its target. “Core” CPI, which for some unknown reason strips out a lot of things consumers have to buy, supposedly because the prices of these items are subject to short-term volatility, also rose 3% MOM, but a higher 3.3% YOY. How this is a greenlight for rate cuts is puzzling to me. But maybe the Fed wants to risk its credibility by trying to cut rates while the aftermark pushes interest rates on the actual debt higher.
Services inflation has generally been trending lower, but in the last few months goods inflation has begun to pick up again. Wait til those tariffs kick in. And I will once again suggest that growth in the cost of health care and health insurance is severly understated. Those of you who just did annual enrollment for your employer-sponsored health plans know exactly what I am talking about. I feel sorry for Trump having to come in and navigate the effects of Biden’s reckless deficit spending, although Trump did his share as well during the first term. But interest rates and inflation will be staying up and people won’t be happy. (ZH Post)
The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at 
Apple Podcasts
Google Podcasts
Spotify
Overcast
PocketCasts
Radio Public
Stitcher
Anchor
RSS - Posts
You’ve noted with every economic report along the way that inflation would not be going away. So in other words, everything is going according to plan. The problem is we don’t know who’s doing the planning and we don’t have any say in it.