I post on these because they are the most important economic indicator right now. The US debt market is huge, unfortunately and every day thousands of buyers and sellers, including foreign governments, large corporations, institutional investors and individuals tell you what they think is going to happen with US interest rates, inflation and economic growth. And what they have been saying for the last 6 months is we don’t think you can get your deficit under control and stop issuing so much debt. We think you are going to have more inflation. It is unlikely that all those buyers are wrong.
Today $16 billion in 20-year bonds was sold by the US Treasury. As is typical with most recent longer-term debt sales, this was a mediocre auction. The interest rate was 4.83%, slightly worse than expected. Demand was soft as well. Treasury Secretary Bessent wants ten-year yields, which are kind of a benchmark, to decline. If auctions of longer-term debt keep having these kind of results, with relatively modest auction sizes, that isn’t going to happen.
