They are buying LT T-bills and replacing them with short-term t-bills at lower maturities effectively.
Its a form of yield curve control. What will take a pounding is the $$, as you now have less purchasing power given this is inflationary. In response to this investors are buying up gold again.
Yeah, I thought about this a little more and realized itās QE without calling it QE, but this only works as long as they can issue on the short end for less. Which, Iām not convinced running a $2T deficit on a $40T debt that already costs nearly $2T in interest expense, lasts very long because the next step is to just turn the printing press on 24/7 to try and cover everything.
I get the impression that its starting to impact what Trump can do as president where heās had to step back on a few things after bond holders started grumbling. I suspect itās driving the half assed nature of the war with Iran where heād like a ground war, but bond holders and voters are both saying no way.
If the government didnāt needlessly spend so much, this wouldnāt be required.
The difficulty is getting everbody onboard with which parts are needless and which are necessary.
Eta: for funā¦ what fraction of your significant otherās spending was necessary and what fraction of your spending do they think was necessary and how do those numbers compare to what each of you think for your own spending.
then again, it might also be a failure to increase taxes. How are you able to tell the difference? Seems like a debtor who is unwilling to go to work is at least as problematic as a one that over spends.
If GDP is growing enough faster than the debt (or at least the interest cost) you can outrun it, but that doesnāt seem to be the case nowadays
Fun!
We are not in a deficit spending mode, so kinda moot.
I think every time I go to dinner without her is probably mutually needless (could eat at home for a lot less). But I like some alone time with my puzzles before I go play stupid-poker. But thatās small change.
Spending too much on an EV? I think needless. But she wants a Toyota product (and NOT a Prius) and not some cheaply-made thing that will need to be replaced sooner, and then we have to go through the whole car-buying cycle again. I think a used plug-in Prius would have been slightly better (prices on those are not dropping unless with a lot of miles), fit in the garage easier.
If all those countries would just pay those big beautiful tariffsā¦ (/sā¦except I think that was part of the motivation)
For example he has stepped back from the goal of American astronauts on Mars by the end of his term to returning to the moon.
You might as well be shooting a Bibi gun to try to stop an incoming freight train. (Buying back $4bn in a market worth $32T)
Bessent knows better, which means all of this is performative (probably for Trumps consumption)
Just going to get worse at this point.
One would think so given how he helped Soros ābreak the Bank of Englandā in 1992!
Right there in the headline. If it makes some people richer (people who own bitcoins, like the President and his issue), thatās is optimal.
If Bessent needs a stronger move in the bond market, weāll send in the military
Typo?
Yes. Have fixed.
That is at the 41st percentile for mortgage rates since 1971.
87th percentile since 2001.
69th percentile since 2021.
You would have to go all the way back to the end of July, 2025, to find rates this high.
Its not just one thing (mortgage rates) hitting the US consumer.
Food prices - high
Insurance - high
Utilities - high
Top 10% of consumers are riding the equities boom, but the bottom 50% are not.
Real wages are now also in negative territory.
All of these things matter in the context of how investors view the US economy.
A t-bill is effectively a call on the future output of the US economy. If that potential future output trajectory slackens, you will see yields rise on the long end as well as holders will sell.
The additional international dimensiom now is Japan selling their long-dated t-bills to bring money back into Japan in order to defend their currency.
CPI is still CPI. Home prices are moderating and falling in some areas. Wages at the lower end have seen gains.
The economy will eventually cycle, but until then you can cherry pick things all you want.
US debt is too high though, we can agree on that. Everything else? Idk..
