Going to more lump these together. Week started out great. A huge 2-year note auction, $69 billion worth, at a lower than expected interest rate and with very good demand. Then on Wednesday, another massive debt sale, $70 billion in 5-year notes. Oops, not so good. Higher interest rate than expected, although a little lower than last month, and weaker demand characteristics, although foreign demand was good. Thursday, disaster, or close to disaster. A $44 billion auction of 7-year notes. Higher than expected interest rate, higher than last month’s similar auction and poor demand, particularly from foreign buyers. The clear message is that buyers have little enthusiasm for anything other than very short term US debt. And look how much we are piling out there, almost $200 billion of debt in a week, and that doesn’t include the massive sales of very short term Treasury bills.
I am not sure how to explain what is going on, and in the after-market interest rates on US debt trended higher, while stocks were also weak. I think the market feels like it is in a turbulent eddy, going round and round with no ability to fix on the shore of where the ultimate destination may be. Is it eventually down the toilet bowl to the sewer, or will be deposited on the shore of some lovely beach, with comfy chairs and cold drinks awaiting us? Trump, in my judgment, is doing himself no favors with the tariff nonsense or how it is handled, creating massive uncertainty. No investor likes uncertainty and the consequences of that flow down to every consumer and worker. Going to be like this for quite a while I fear.
