The US is now running $2+ trillion deficits, spending over $1.2 trillion on annual interest expense, and fighting 60 consecutive months of 2%+ inflation.
On top of this, oil prices have nearly doubled since the Iran War began, inflation expectations are surging, and the Fed went from rate cuts to discussing rate hikes.
Taming the surge in yields is nearly impossible over the long-term, even for the US Treasury itself, without a structural shift in several of these fundamental drivers.
Simply put, “free money” is only “free” for so long, and the world cannot handle $100+ oil prices on top of compounding inflation.
The US Treasury just announced it is tripling long-term buybacks to $6 billion and yields STILL increased on the news.
$6 billion in buybacks is inadequate compared to the issuance calendar. This month’s 10-year note auction is $39B.
Despite it all Bessent claims he is the master of the “markets”.
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