The last US debt auction of 2024 was held today for 7-year notes, $44 billion of them, a large size for this maturity, but then we are seeing and going to see record sizes for every maturity far into the future. ZeroHedge again described this as a “strong” auction, because demand was high, particularly among foreign buyers, but some of that demand relates to currency factors, including what the strength of the dollar may be under Trump. The interest rate, 4.53%, is the highest since May, so a lot of the demand is tied to getting that higher rate. I will point out that in November 2017, pre-epidemic, the rate on this security was around 2.5%. That is seven years ago, so you are replacing debt with that low interest rate, with a rate and interest payments 70% higher, and selling a lot more of it. Unless and until there is serious deficit cutting, and even efforts to reduce the debt, the only solution to this problem is inflation, and even that won’t help much, because much of government spending–Social Security, etc., is tied to inflation. As I recall inflation may be the biggest reason Trump won. Good luck with all that.
