The Treasury Department is issuing a 20-year bond for the first time in 34 years to help pay for the ballooning $1 trillion dollar budget deficit.
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We talked about the bond bubble. Here’s a wild card in the equation. I think it’s a bad sign. IMHO the only reason to issue a 20 year is the 10, 30, and 50 are not selling. Or not selling at rates they find acceptable (i.e., too high). If I am right, then you’ll see a consumer price increase as well as a drop in the overall value of bonds. That will translate to higher interest rates on mortgages, cars, and credit cards. We’ll see.
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