Oldfx. Will be a interesting day. Record bond auction. Equal to what my province Ontario has in total debt. They have never had a failed auction at the treasury to my knowledge. The question is has global appetite dropped. What will the dollar be worth in ten years. Will it have dropped half in value. I don’t know. I expect many are questioning this. I can’t see how and major western sovereign debt is a good buy. There has been no major western nation that has paid any of its national debt down during the last 18 years. Arguably the economy and stock markets have done well. If they haven’t paid off principle during this period they are not going to pay it off ever. Without massive austerity. But that’s worked out shitty for Greece, Spain. I expect we will be over three percent by the end of the week on the ten year treasury. The rest of sovereign debt should also have higher yields.
Many people talk purely about servicing debt. Yes the states can service higher rate debt. But if budget deficits and trade deficits increase at some point there has to be a breaking point. Luckily for the United States there dollar currency is 70 percent of global currency. If they were only ten percent the dollar would be far lower ,rates would be far higher.
Another area to think about is my parents generation. Boomers will be drawing out their retirement money today and in coming years. That’s billions no available in pension funds to buy treasury paper. I know my parents took out a sizable part of their retirement nest egg and put it into cash. Purely on the drematic markets a few weeks ago. That generation got hit with the dot com bubble,2008 shitshow Many May not have the stomach to ride out stocks or even bonds which most of their porfollios are probably conprised of.