Austerity and tax cuts look no further than the CN of the UK Liz Truss.
C is complete…she is still acting like a nut.
But it is here now…
The bond market imploding would mean that rates go up and bond prices fall, right? With longer term debt being hit harder.
It takes years for the yields to come back down. It creates a huge impression of lack of economic stability.
TI is good for that.
The first sentence is correct.
The question of which durations will be hit harder is less obvious.
The Federal Reserve controls the fed funds (overnight) rate.
The open market determines the longer term rates which are constantly changing and shown in the yield curve. The government has an impact on yields since Treasury is flexible and is constantly shifting how much it borrows and at what durations. The Federal Reserve also has an impact since it can buy bonds (Quantitative Easing) or sell/ roll off its immense book of bonds.
Wendy
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The FED can do that to a much greater extent than the UK. The US has far more international and internal power over the financial markets.
Until now.
Frankfurt would have to go along. Central Europe is now the heart of the financial world.
We need to earn our way. Which creates more wealth over the long run. Industrialization. Manufacturing.
Frankfurt is not creating much wealth. Supply side economics.
I think we understand that market volatility and uncertainty are seen as risk factors to lenders. They tend to push up interest rates. And so do increasing govt deficits.
The President jawboning for lower interest rates is like a finger in the dike.
The inability of Congress to function regarding debt limit and anything vaguely resembling a budget is a lit fuse burning merrily daily closer to the nitroglycerine of potential bond market default…. Five weeks or so to go until March 14 debt limit armaggedon.
A reminder of how bad the outlook is with haplessly crippled Lindsay Graham on the Senate side and differently but also disabled Mike Johnson in the House dragooning their barely enough votes to pull in different directions regarding all things…. They are both aware of the nitroglycerine and short fuse, but many of their colleagues are only aware of likes and dislikes in the present, and consider CRs and deficits as demonic proofs of evil.
See no evil speak no evil.
2 Likes
He is ADDING MORE WATER.