Sovereign Debt Auctions are usually non-events for the public at large but the recent 20 year Bond auction had a notably sour reaction after the Bid To Cover was discerned as almost entirely Dealers who must bid. The 20 year Bond is not the issue but it portends difficulty in getting foreign bids and other support for US Debt going forward. It was almost inevitable that the US Bond fall into disfavor after weaponization using the Western based financial machinery to grab Russia's holdings.
The Bond Market is the biggest market of all far out pacing the Stock Market. It is where the “smart money” goes or so it is said. But how smart is it to buy the Bond of a bankrupt company let alone a bankrupt nation. Of course, the argument is made that the US Bond will never default because the Fed can intervene, print money and buy all the Bonds issued to keep the refi train chugging along. Yes, that is factual but the resulting inflation will make the Market demand higher and higher returns for the higher risks involved and that increases the interest payments and eventually there goes the system..
The Fiat currency experiment (I am being generous) has many chickens and they are all coming home to roost. My previous writing spoke to the reserve currency status. That may by necessity continue until slowly but surely the scale tips in favor of settling with Gold. Gold is the only asset that carries no 3rd party risk. Of course, I am speaking of physical Gold not paper Gold like Futures Contracts or other Derivatives, even ETFS claiming to be covered by the shiny stuff.
I believe we are witnessing another big moment in time when the financial system must and will change. The US is tone deaf to its deficits but others hear its call “we are debasing the dollar and making the debt sustainable through lowered currency value”…if you listen very closely, you can hear it too. Don't think that Congress and Trump do not know this. Debasement has always been a plan to be implemented at the right time and now is about as good as it gets when Congress will rubber stamp Trump's Big Beautiful Bill. Is it really so beautiful? There are some good items covered in it but scoring proves that it adds to the National debt about $2T every year going forward ,so looks like we are guaranteed to have $50T in National Debt. Along the way we will have trouble getting bids on our Bonds, and interest rates will trend higher including mortgage rates which will further slow the economy and the spiral gets into full swing.
The avoidance of pain has reached its end. We will have pain whether Trump or Jesus Christ is in Office, though I'd favor Christ, at least for his purported displeasure with money exchangers.
Bessent knows much more than he publicly can speak to, and his position must be very uncomfortable when in front of the camera. Does he lie? Well, yes, but more so he withholds whole truths and gives half truths. What tricks are up his and the Donald's sleeves? I am sure there are some good ones to come. Will they be pragmatic or just filled with smoke and mirrors while flash paper is set off to keep our attention elsewhere.
Buckle up buckaroos!
Best,
Donn Marier
DM-Your Own CFO