NEM - The Maddening Treasury Tribulation

2024-04-30 11:12:07 ET

Summary

• The Treasury Department is selling record amounts of T-Bills to fund operations.
• A look at treasury issuance, gross and net, over the past decade.
• Government behavior versus rational thought.
• As an individual investor, can you take action? A Primer for bonds, precious metals, and select ETFs.

Summary

While the market widely embraces the "soft landing" narrative and equities hover around all-time highs, the yield curve remains inverted. It has been so for almost two years now. Despite an obvious refinancing arbitrage, government actors behave in a way that seems to defy rationality. That is, while the Fed is maintaining its rates at over 5%, the Treasury Department is resisting the lure of issuing long-term treasuries, and instead, offering up record amounts of short-term debt. Why? It may be anyone's guess, but for now, the future of equity markets remains unclear, and unintended consequences abound. Can investors keep riding the equity gravy train, or is it time for alternative assets?...

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