Treasury Yields Rise Over Debt and Deficit Concerns, Yellen Says X-Date is October 18
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19 comments on Treasury Yields Rise Over Debt and Deficit Concerns, Yellen Says X-Date is October 18
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19 Comments
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2 years ago
October 20 is a Social Security benefit pay day. So will the government default on Social Security checks or government debt or something else? Somehow our corrupt Congress managed to vote on a $1 billion iron dome benefit for Israel on a near unanimous basis within the last few days. Why was this give away paid not paid for by billionaire friends of Israel?
2 years ago
Added some stocks to my fledgling energy/dividend portfolio. Oil stocks not taking much of a hit today. I added two renewables and two new oil stocks that I think are well-positioned to profit from the new economics of climate change.
They all pay decent dividends at the moment …….. and I now have 3 of the top 5 US oil refiners.
The idea is not to chase the small caps…..just buying large and mid-caps that have refining capacity and large reserves
Now long CVX, CNQ, MPC, PSX, CWEN and OGE. These are just small starter positions for what I hope will be very long term holds….will DCA and add on corrections henceforth. I hope we get a huge correction so I can back up the truck.
2 years ago
The problem is whatever party is in control does not want to be blamed for raising the debt ceiling. It’s stupid. The national debt doubles about every 8 years no matter which party is running things. No one is going to vote one way or the other because the debt ceiling went up. The dems can raise the ceiling on their own, but want some republican votes so they can claim it wasn’t just them.
2 years ago
“..no more financial crisis in my lifetime..” Yellen
2 years ago
Their hubris has been amazing.
2 years ago
“Meanwhile US treasury yields are on the rise.”
…
Transitory.
Upcoming fugly economic data will see to that.
2 years ago
….so the FED will bail out thousands of defaulting companies ?? Miracles may happen once in a while, but not ALL of the time…..the future will show ….
2 years ago
Mish what happens if they just keep issuing debt? Does Janet go to jail? Does somebody file suit? Do they have standing? If they issue say.. 250B in 6m bills and do nothing more, can any court order reverse it?
2 years ago
Outside of finger pointing, probably nothing would happen.
2 years ago
Why not just stay inside the law and only pay on the interest payments of the debt though? The 14th amendment guarantees “The validity of the public debt of the United States…shall not be questioned.”. We have more than enough revenue to only pay interest on the debt as it comes due.
I’d suggest stop of payment of social security as the first thing to go. That’ll get the gears of Congress turning in a heartbeat, while also maintaining the law of the land of the 14th guaranteeing our public debt will be paid.
2 years ago
Is gold dropping some because no one believes a default will happen? Anyone think a better buying opportunity will happen around October 18? I don’t know enough to have a strong opinion.
2 years ago
Gold looks underpriced to me here, but that doesn’t mean it can’t go down more.
For physical….the premium over spot for gold bullion coins at my dealer today is 6.3%. Eagles are 1858 and change at a spot price of 1740
The premium was up to to 12% earlier in the year….so it’s pretty good now for buyers compared to recent times, imho.
2 years ago
It sounds like the Fed is not manipulating the bond market quite as much as it did last week.
2 years ago
Reverse repos are off the peak, but still 1.297 trillion as of yesterday. That drives up the interest rate, theoretically, at least. So maybe the manips are just different manips than last week.
2 years ago
Yields are heading lower with or without Federal Reserve’s “help”.
When (not if) Bubbles collapse there will be a rush to safety. Treasuries have an explicit “full faith and credit” of US government. No other asset does. None.
No one cares about Return OF Credit now (all about Return ON Credit) … when the worm turns the bid will be mighty.
Still fully expecting US yields to go negative at SOME point … possibly out to 10yr (or beyond) on yield curve.
2 years ago
“Still fully expecting US yields to go negative at SOME point”
My thoughts, some time maybe but I can’t see it anytime soon. Not that I’d bet. I think stagflation is more of a threat near term. Stock prices and bond prices rose together so I don’t see why they couldn’t fall together when the bubbles burst.
Yields are still artificially low because of Central Bank buying and this is going to cease or at least slow down in the not too distant future. That will require a lot of buying to replace the Fed. Although the knowledge of the forthcoming taper might be behind the recent rise in yields, a bit of sell the rumour buy the fact maybe. Might be totally wrong though 🙂
Real yields might go more negative
2 years ago
“I think stagflation is more of a threat near term.”
Agree.
2 years ago
“Yields are still artificially low because of Central Bank buying”
…
Well, the facts say otherwise.
Q3 ended Fall of 2014 and until late 2019 (when reverse repo madness began) Federal Reserve balance sheet DECLINED. 10 yr yield? Chopped around for years and then dropped 100 bps the year prior to resumption of balance sheet growth. Yields responding to poor economic growth —- economy flirting with recession when covid hit … massive fiscal / monetary stimulus kicked can to now. Economic weakness on deck.
2 years ago
Yes all good points but during that period there was no CPI inflation, no structural supply issues, no pandemic with it’s likely ongoing drag from new variants etc. Central Banks are trapped, on the one hand they’ll want to retain easy conditions but these won’t fix the structural issues. On the other hand they’ll need to try and stop price rises getting out of hand as their claims of transitory where very thin. They run the risk of getting too far behind the curve. In the meantime the public are going to be screaming from the rooftops about the rising costs of living so the politicians will start feeling the heat. That’s how I see it panning out but there is no normal now so who knows.