The Great Roundup

As a youngster, every Saturday we would head to the movies for a double feature of cowboy movies; all for the price of a quarter.

Sandwiched between the storyline we saw scenes of cowboys rounding up cattle, herding them toward parts unknown. That was before McDonald’s, and we never saw them marching to the slaughterhouse.

We are being herded

This week’s reading convinced me that our government is herding the cattle (us) to a place we don’t want to go. They don’t want us to know the destination until the gate is closed. Misinformation is masking the trail.

CNBC provides, “A recap of Fed Chair Powell’s inflation and interest rates comments to the Senate”:

“Fed Chairman Jerome Powell said strong demand is driving Treasury bill yields close to zero.

‘It’s a lot of demand for short-term,” said Powell. ‘There’s a lot of liquidity, and people want to store it’ in Treasury bills.

BS Alert Symbol…. ‘In a way, it’s a statement of confidence on the part of the market that we will have a robust and ultimately complete recovery,’ he said.

…. The 10-year yield has barely changed during his comments.”

Demand? Really? If there is such demand for low-interest US debt, why has the Fed’s balance sheet doubled and interest rates tripled in the last year?

Total Assets Chart

Chuck Butler weighed in:

“Anyone with some gray matter can figure out that if there is a lack of demand for Treasuries, that the only way to make them attractive again, is to jack up the yield… The 10-year Treasury’s yield has nearly tripled in the last 6 months, due to a lack of demand at the low yields…

Just last week the markets told the Fed that they couldn’t take on any more Treasuries. That was bad timing, because shortly after that announcement, the House approved the $1.9 Trillion Stimulus… This is NOT money that the U.S. has in reserve, it’s money that they will have to print, and issue more Treasuries to finance that debt… Uh-Oh…”

Wall Street On Parade (WSOP) echoes Chuck’s explanation:

Wall Street Sends a Message to the Fed: We Have Run Out of Places to Stuff Your Treasuries

US Treasury Node Yield Chart

…. The Treasury market is now projectile vomiting T-notes should come as a surprise to no one. As the chart above indicates, yields on the 10-year note have been rising sharply since early August….

The sharp and persistent rise in yields have left those who bought the T-notes at dramatically lower yields licking their wounds from heavy losses.

…. That has also dramatically lessened the appetite to buy more Treasuries at the current yields when the supply is expected to continue to increase as a result of rising government deficits and stimulus spending.

Another catalyst for yesterday’s selloff in Treasuries was a very sloppy Treasury auction where the government attempted to stuff $62 billion of a 7-year Treasury note into an already over-supplied market.”

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