America’s Bonds Are Getting Harder to Sell

WSJ ^ | April 14, 2024 | Eric Wallerstein

[george76]

A series of weak auctions for U.S. Treasurys are stoking investors’ concerns that markets will struggle to absorb an incoming rush of government debt.

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inflation not tamed ... Federal Reserve will leave interest rates at multidecade highs for .. years to come. The 10-year yield—the benchmark for borrowing rates on everything from mortgages to corporate loans—finished the week around 4.5%...

At the same time, the government is poised to sell another $386 billion or so of bonds in May—an onslaught that Wall Street expects to continue no matter who wins November’s presidential election. While few fear a failed auction—an unlikely scenario that analysts said could potentially trigger prolonged turmoil—some worry that a glut of Treasurys will rattle other parts of the markets, raise the cost of government borrowing and hurt the economy.

“There’s been a big shift in the market narrative. The CPI [consumer-price index] report changed everybody’s view of where Fed policy is headed,”

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In the first three months of 2024, the U.S. sold $7.2 trillion of debt, the largest quarterly total on record. That surpasses the second quarter of 2020, when the government was financing a wave of Covid-19 stimulus. It also builds on a record $23 trillion of Treasurys issued last year, which raised $2.4 trillion of cash, after accounting for maturing bonds.

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the deficit will increase from 5.6% of U.S. gross domestic product to 6.1% ... Debt held by the public is set to expand from $28 trillion to $48 trillion in that time, up from $13 trillion 10 years ago.

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A record $8.9 trillion of Treasurys, roughly a third of outstanding U.S. debt, is set to mature just in 2024,

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If we continue to see hot inflation prints, it’s going to keep a lot of people on the sidelines

[woodbutcher1963]

The cost of extraction has gone up faster than the price of gold.