With seven-year notes you are getting closer to mid-term debt. The Treasury auctioned $44 billion, a big number for this maturity, yesterday. And these mid-term auctions, 7 year and ten year paper, don’t draw the same enthusiasm as the short term debt, but get more love than the long-term debt is. The yield was 4.19%, lower than expected and than last month’s similar auction. Demand was fairly good, but not as strong among foreign buyers, and we rely on tremendous buying from foreigners to sell all this debt. And guess where they get the dollars from to buy this debt? From the trade deficit that Trump and others keep yammering about. When we buy imports we pay in dollars, and those dollars ultimately get used one way or another back in the US. One of the big ways is supporting our debt habit. There is a hole in Uncle Sam’s arm where all the money goes. And in return for buying our debt, US taxpayers get to pay enormous amounts of interest to these foreign buyers, like China, Japan, European countries. Not a good cycle for US consumers or taxpayers and a truly hard habit to break. Trump said today that they would balance the budget in a couple of years. I am hear to tell you that if anything like the tax ands spending bills passed by the Senate and House recently ultimately are enacted, we will have a deficit at the end of Trump’s term that is just as big as the one existing today. And our interest rates will reflect that.
