It’s a bit circular
August 1, 2023
–Lacy Hunt of Hoisington said that the $1.4 trillion deficit so far in the 3 quarters of this fiscal year was financed primarily by private domestic non-bank investors. If they haven’t quite gotten their fill yet, US Treasury “…on Monday announced it expects to borrow USD1.007 trillion in privately-held net marketable debt in the third quarter and an additional USD852 billion in the fourth quarter.” (MNI) Big numbers.
–SLOOS report indicated somewhat tighter credit conditions. From the report:
When asked about reasons for tightening standards or terms during the second quarter, the most frequently cited reason was a less favorable or more uncertain economic outlook. Major net shares of banks also reported a reduced tolerance for risk, deterioration in their liquidity positions, worsening industry-specific problems, increased concerns about the effects of legislative changes…
–So banks are more wary of lending to the public due to uncertainty, but the public is happy to park money with the government for the same reason? We used to call that “crowding out”. High gov’t yields divert money to public debt, which in turn is used to backstop banks whose capital positions are deteriorating, so funding to productive enterprises becomes more difficult to secure. That’s called death-spiral-nomics folks.
–Yesterday CLU3 settled at 81.80, a new high for this calendar year. In other energy news Niger is cutting off uranium supplies to France. France gets 15% of uranium from Niger and generates 68% of electricity production with nuclear.
–US rate futures slightly higher on the day. Ten year yield -1.4 bps to 3.953%. 30-yr holds above 4% at 4.013%. Today’s news includes JOLTS expected 9.6m from 9.8 last. ISM Mfg expected 46.8 from 46. AAPL and AMZN Thursday.
https://home.treasury.gov/system/files/221/TBACRecommendedFinancingTableQ32023-05032023.pdf
