This Is Getting Redundant, But Important to Watch

Another troubling US debt auction yesterday.  This one was a “mere” $22 billion in 30 year bonds.  The interest rate was high–4.91% compared to last month’s 4.54%.  That is a big jump in a month.  I suspect the rate will get even higher in coming months.  Demand was acceptable, why wouldn’t it be at that interest rate, but if you tried to sell $50 billion of 30 year bonds, the rate would be far higher, which is why the biggest auctions are at the short end, where rates are somewhat lower.  The Federal Reserve has officially lost control of the interest rate on US debt.  No one cares about the Fed’s nominal interest rate; they care about the deficits and the ever-mounting debt load that has to be rolled over.  At this time in 2021, the interest rate on 30 year US bonds was 1.9%, in 2022, 2.15%, in 2023, 3.91%, in 2024, 4.24%.  You can see the progression.  We are paying more and more interest, which adds to the deficit, which leads to the issuance of even more debt, which means more interest is paid, on so on.  This cannot end well and it won’t.  (ZH Post)