Skip to comments.Mnuchin to Wield Power Over Yield Curve With Fresh Supply Boost
Posted on 07/30/2018 10:10:30 AM PDT by Hostage
As Treasury Secretary Steven Mnuchin prepares to unveil plans to finance the surging U.S. budget deficit, his choices are seen as key to the fate of the yield curve, which is drawing scrutiny because of its march toward inversion.
The nations debt managers are set to release a funding program for the next three months on Aug. 1, and bond dealers say its a given that coupon-bearing issuance will rise for the third straight quarter. Some project Treasury will extend the sector it leans on to finance budget shortfalls out to the five-year maturity. Either way, the announcement could add fuel to the curve-flattening trend, which has alarmed officials who see it as signaling a darkening economic outlook.
Tax revenue is trailing spending, partly because of President Donald Trumps tax-cut package. As a result, the nations fiscal stewards have little choice but to keep expanding Americas $15 trillion pile of Treasuries, just as the Federal Reserve is raising rates and shrinking its balance sheet. The upshot: Net Treasury issuance will more than double this year to $1.44 trillion, JPMorgan Chase & Co. predicts.
(Excerpt) Read more at newsmax.com ...
But many would like to see Mnuchin in jail as one of dozens of CEOs who presided over predatory lending scams during the Bush-Obama years. Mnuchin was at OneWest which is one of the worst destroyers of human lives surrounding the largest scam in US history.
An inverted yield curve is an interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality. This type of yield curve is the rarest of the three main curve types and is considered to be a predictor of economic recession.
Many capital investments are linked to longer-term securities such as the 10-year Treasury used by the housing market to set rates for mortgages.
Should the 5-year attract capital away from the 10-year Treasury, mortgage rates will go up.
There are many other parts of the economy that hinge off the yield curve patterns. This article points out what Mnuchin is facing and what his job is to do to fix it.
I know it seems simplistic, but couldn’t they cut spending by even a little to start reducing that debt? There is plenty of fluff and waste in a $4 trillion budget.
Spending more than you take in apparently is not the problem..................
I understand now why the President chose Steve Mnuchin to be Treasury Secretary. Mnuchin understands the nuts and bolts of debt, Wall St., banking.
And Trump does, too. The yield curve is the best indicator of the Federal Reserve manipulating the free market. I’m glad Trump is fighting their desire to put the economy in recession once again.
That is already started in certain areas. There is a planning team under the Trump Administration that is working on a more comprehensive plan.
Trump is acting like a physician on the American people under a Hippocratic Oath “FIRST DO NO HARM”.
Trump is preparing the foundation for a sustainable 4% GDP growth. That will reduce the deficit greatly and start paying down debt.
There are other history shattering discussions going on such as reforming the Federal Reserve.
One note to take away from a study of Trump and his history, is when he says:
IF YOU’RE GOING TO THINK, THEN THINK BIG!
Tax revenue is at an ALL TIME HIGH, because of the tax cut bill.
Yep, this is from Bloomberg. No bias there! /s
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