🚨 The U.S. just auctioned off $25 billion in 30-year bonds.
And the results were bad. Really bad.
Weak demand, rising yields, and big warning signs for America’s debt future.
(a thread)
Why would foreign buyers pull back? A few reasons:
– Currency hedging costs: if you’re in Japan or Europe, hedging USD risk wipes out most of the yield
– Geopolitical tension
– Diversification away from Treasuries
- Rising debt
Even at 4.8%, they weren’t buying aggressively.
So, quick recap:
– Tail = biggest in a year
– Bid-to-cover = weakest in 2 years
– Foreign demand = fading
– Domestic demand = slipping
– Fed support = propping things up
– Dealers = stuck holding the bag
And the market noticed.
If the Fed cuts short-term interest rates to stimulate the economy but long-term bond demand stays weak then long yields could keep rising.
You’d have short rates going down… but long rates going up.
That’s a steepening yield curve and it can wreck markets.
So what’s next? If future auctions look like this one, the pressure will mount. We could see:
– Higher yields
– Weaker equity markets
– Fed intervention
Yes, that includes Yield Curve Control (YCC), where the Fed sets a cap on long-term yields.
And here’s the kicker:
Bond markets care about fundamentals. Equity markets care about vibes.
But when the fundamentals get loud enough, they drown out the vibes. If stocks don’t listen to bonds soon… something will break.
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Some quotes from 1929, before the devastating crash.
Sound familiar?
You decide 🫵
1. Charles E. Mitchell, president of National City Bank, September 1929:
“The industrial condition of the United States is absolutely sound, and nothing can arrest the upward movement.”
In 1910, the 6 most powerful men in America vanished.
They boarded a private train using fake names & disappeared to a remote island.
What they created in total secrecy now controls $30.5 trillion in U.S. money.
Here's what happened in that secret meeting held on Jekyll
From secret draft to national law
The plan, dubbed the Aldrich Plan, was introduced to Congress.
At first, it failed.
But in 1913, with Woodrow Wilson in office and after political tweaks, it passed as the Federal Reserve Act.
The Fed was born, and the public had no idea how.
.
S&P 500 at Resistance
Don't Forget that the S&P 500 Rally has Stalled at the Trendline of Resistance from the 2023 low. Just as I told you SPX had bounced off Major Support at the April Bottom, when I Called the Day of the April Bottom, now it is Stalling a Major Resistance.
Rarely has the end of an era been signaled more gracefully than by Jerome Powell. "The Kansas City Fed was wise to bring Chair Volcker to this national park more than 40 years ago, and I am proud to be part of that tradition," Powell said, before stepping off the stage. Now, the
Ok you win.
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