Five year trend shows geopolitical risks create a floor, but long-term supply-demand trend is weak due to manufacturing weakness pic.twitter.com/NSn9PlR8OH
— Daniel Lacalle (@dlacalle_IA) October 7, 2024
“This morning, yields on the U.S. 10-year bond soared over 4%. This continues a non-stop rise in yields following the Fed’s 50 basis point rate cut on September 18.
Normally, long term rates follow the path of interest rates in the overnight lending market, which the Fed controls. But this isn’t a normal environment.
Consider last Friday’s “blowout” jobs report, which was entirely driven by the biggest government hiring spree on record outside of COVID-19. Whoever believes our economy is strong, must think borrowing unsustainable amounts of money, printing money to pay for those loans, and then hiring people to do wasteful government jobs is the path to prosperity. It isn’t.
The U.S. government is running deficits equal to 6% of GDP, and only generating 3% economic growth. In other words, if you remove government spending from the equation, America’s economy is shrinking.
We are on our way to a Soviet-like collapse in our economy as more and more of everything we do – including our jobs – are controlled by the government.
Mr. Market is starting to sniff this out. That’s why investors are dumping Treasuries and flooding into gold, stocks, and real estate at record high prices.
Meanwhile, we’re witnessing an entire presidential election campaign without either major party bothering to address the single most important issue at stake in our country: America’s unsustainable debt burden and the coming insolvency of the federal government.
It is only a matter of time now until, one day, the U.S. Treasury market suddenly realizes that no amount of printing will stop the collapse: there will be “no bid” for our country’s bonds.
And on that day, everything you think you knew about America will be completely gone.”
The bond market is revolting against the Fed
This morning, yields on the U.S. 10-year bond soared over 4%. This continues a non-stop rise in yields following the Fed’s 50 basis point rate cut on September 18.
Normally, long term rates follow the path of interest rates in the… pic.twitter.com/xn4cz5wJqF
— Porter Stansberry (@porterstansb) October 7, 2024
The looming U.S. debt crisis warning signals
Central banks and investors all over the world are losing confidence in the U.S. government debt, which is also abandoning gradually the confidence in the currency.