The U.S. government’s borrowing needs are on the increase, and they are interest rates.
Now isn’t the time for you to increase borrowing. Why? Because it is gonna ended up costing taxpayers more. But do our elected officials care? Probably not. It’s simply business as usual.
Just a while back there were confirmation of rising inflation. I’ll go to that in the minute-
The Federal Reserve is promising 3 or 4 more rate hikes this year, but the government already cut taxes which is now promising to pay more about infrastructure (among other things). Consequently, it seems, it’s time to gain access to.
This week, the U.S. Treasury is selling a quarter of an trillion dollars of debt! And at a time when foreign affinity for buying this debts are declining and interest levels are rising!
So far on this week’s Treasury auction, shorter-term bills and bonds are increasingly being issued at rates of interest not seen since 2008. Not surprisingly, that’s dependant on expectations for rising inflation.
Last week, we got that inflation moved over expected in January.
The Consumer Price Index (CPI) jumped 0.5% in January to the expectation of a 0.3% rise. Core CPI (excluding food and also) was up 0.3% around the expectation of an 0.2% rise. Year-over-year core CPI ticked around 1.8%.
CPI can be a proven market mover, specially when the info surprises observers.
When I have faith that “proven,” I mention a brand new York Federal Reserve study from 2008 that explores the way the details reveals economic data affects asset prices inside the stock, bond, and foreign-exchange markets. The authors saw that certain announcements generate significant and chronic price responses.
Treasury bond yields show the strongest response, share prices the weakest.
We’re watching it play out in real time: Treasury bonds spiked higher and turn elevated after last Wednesday’s discharge of CPI data. Stocks practically ignored inflation and poor retail sales by flying higher all week.
Along while using the CPI release came very disappointing January retail sales figures.
The expectation was with an uptick of 0.3%, but we actually saw a 0.3% decline. With auto sales and gas excluded, analysts expected an upturn of 0.3%