The government shutdown apparently didn’t save Uncle Sam any money. The US Treasury Department said it will borrow about $8 billion more than originally estimated in the first quarter of 2019 as deficits continue to spiral upward.
According to new Treasury Department projections, the US government will issue $365 billion through credit markets in the January-March quarter. This stacks on top of the $426 billion borrowed through credit markets in the October-December quarter.
The US national debt increased by $1.27 trillion in fiscal 2018. If you expected the pace of borrowing to slow in fiscal 2019, you’ll be disappointed. In just the first 11 business days of the new fiscal year, the US government added another $138 billion of debt to the total. That brings the total national debt to a staggering $21.654 trillion — or as Wolf Street put it “debt out the wazoo.”
Meanwhile, the two biggest buyers of US Treasuries are in a selling mood.
The SchiffGold Friday Gold Wrap podcast combines a succinct summary of the week’s precious metals news coupled with thoughtful analysis. You can subscribe to the podcast on iTunes.
Death-spiral — The downward, corkscrew-motion of a disabled aircraft which is unrecoverably headed for a crash.
The US federal government may well be in a death spiral – or perhaps we should call it a debt-spiral.
Interest rates are climbing quickly.
The yield on the 10-year US Treasury hit the highest level since 2011 in the midst of a massive bond sell-off Wednesday. The selloff spread across the globe on Thursday morning. ZeroHedge called the spike in yields a “monster move.”
Yields have been on the rise this week in the midst of a bond market sell-off.
Two-year borrowing costs hit their highest level in a decade Wednesday. The yield on the 2-year Treasury climbed to 2.816%. Meanwhile, the 10-year Treasury yield hit a four-month high of 3.07%.
What’s going on here?
The SchiffGold Friday Gold Wrap podcast combines a succinct summary of the week’s precious metals news coupled with thoughtful analysis. You can subscribe to the podcast on iTunes.
The SchiffGold Friday Gold Wrap podcast combines a succinct summary of the week’s precious metals news coupled with thoughtful analysis. You can subscribe to the podcast on iTunes.
The economy is strong!
Or so the mainstream financial talking heads tell use every day.
Meanwhile, one of the best predictors of a looming inflation is flashing red.
The yield curve between the two and 10-year Treasuries narrowed to around 34 basis points this week. That’s the lowest level since 2007 – right before the financial crisis. Even more troubling, the global yield curve has inverted for the first time since 2007.
We’ve written a lot about government debt and warning signs in the Treasuries market. The US government needs to sell over a trillion dollars in bonds a year over the next few years to finance its skyrocketing deficit. Who exactly will buy all of these government bonds remains unclear and the impact on interest rates could send shockwaves through the entire US economy.
Equally troubling, but less often discussed, are the risks piling up in the corporate bond market.
