The first US debt auction of the year is complete; another massive $58 billion in three-year notes. Demand was tepid and the rate was higher than desired at 4.33%. Three years ago that interest rate was less than 1.5%. We are rolling over debt at three times the cost. What more can I say, same old story. If there are not quick signs of a reduction in the deficit, this won’t change and the longer-term auctions will get really bad. No one is buying 20 or 30 year maturities with low interest rates unless there is clear visibility to some substantial improvement in the US financial picture.
