The week’s auctions began on Tuesday with about $58 billion in three-year notes. The high interest rate, at 4.29%, was a little lower than expected (the so-called when-issued rate), but was higher than last month, which was only 4.18%. This continues the very negative trend of rates ticking up somewhat significantly over 2026. Overall demand was good, which I again attribute to the higher interest rate, and foreign buying was also good.
On Wednesday we got a $42 billion ten-year note auction, which drew strong demand and why wouldn’t it, because continuing the trend of recent months the high interest rate was, well, higher than last month, 4.68% versus 4.59%. Not only was overall demand strong but foreign buyers were more than happy to pile in for this rate. Meanwhile, the US is spending way over $1 trillion in interest every year and rising rapidly. The craziness cannot go on.
Thursday closed out the week with a $25 billion 30-year bond note. Yields on this longest-term US debt were already going up, up, up before the auction and sure enough the high interest rate was the biggest in 25 years, at 5.22%, higher than last month and higher than expected. Overall demand was below recent averages as was foreign buying, even with the higher interest rate. Every one of these auctions is increasing the total interest cost of the federal government and raising the deficit and debt pile even bigger.
The trillion dollars is a small price to pay to let greedy corrupt dishonest bankers control the money supply instead of our elected representatives. It gives the politicians a scapegoat even though the Fed is the tail and Congress is the dog. Fiscal behavior of the government is the root cause of everything. The Fed, as Milton Friedman showed in one of his papers, only makes it worse in the long run because being a political entity the Fed can only react after the fact and not before it.
I have suggested a way to put the fiscal blame for mismanagement back on Congress and save a trillion dollars. A Nobel Prize winning economist advanced the idea. Nothing is worse than people who complain and whine expecting someone else to fix what he or she sees as problems.