Jul. 8 at 7:57 PM
Watch the 10-yr Yield - Above 4.25% adds to US debt
This why US Treasury is selling more Bills than Bonds to fund their massive US govt spending - shift reflects a tactical move to minimize near-term borrowing costs
Note: Funding deficits w/ very short-term paper, there’s a risk that a shock could come along that puts that funding cost at risk - exposes you to higher interest rate volatility or more expensive financing costs down the road. If inflation suddenly rises & the Fed has to consider hiking rates, for example, that would increase the cost of short-term funding as yields on T-bills rise. In addition, a recession & contraction in economic activity could cause a drawdown in savings that reduces demand for short-term paper
Treasury Borrowing Advisory Committee, which advises US Treasury, has recommended up to 20% of the govt’s outstanding debt be in the form of T-bills, but this is now likely to go higher to 25%-30%
Currently, Money Market Funds are eating up short-term Bills
$TLT $SHY