Somewhere in the last few days I read that central banks in other countries around the world were reducing their purchases and holdings of US debt, which would exacerbate an already bad supply/demand situation. If that is true, it didn’t appear to impact the first auction of that debt in a while, although it was shorter-term three-year paper, which has held up better than the longer-term debt. The size was again huge, $58 billion, but the interest rate was a little lower than expected and than last month’s similar auction. And demand was strong. A couple of more auctions coming up this week, both a little longer term, so we will see how the dynamics hold up.
I have no idea yet how the bond market feels about tariffs, spending cuts coming from Musk’s work, Congress’ spending and tax plans or anything else, but if I were Trump and Bessent, I would be relentlessly focussed on showing we can reduce the deficit. A reminder that you can find all the results here. (US Debt Page)
