Locked Up For 50 Years
Today’s markets were jolted by a volatile oil price. Oil started out lower, then headed up at the end of the day, gaining over $4.50/barrel. Stocks started out up, and the headed back to yesterday’s close, and then headed way up. Stocks totally ignored the rising oil price, and instead decided to concentrate on the financial sector whose share were gaining ground today based on the employment report from ADP which is high volatility statistic at best, and should be ignored at worst.
Bonds were unchanged, as was the Dollar. Gold continued losing ground.
In the news today….
The Government is going to borrow $27B next week by selling 10 year and 30 year bonds. This is the beginning of covering that huge federal deficit by selling bonds. In addition, the Treasury is considering selling 50 year bonds – and I view this as a trick of some sort as I can’t imagine anyone actually locking their money up for 50 years. This large increase in bond sales will drive interest rates up over the long run, as the bond supply will be increasing, thereby dropping the value of bonds (increasing their interest rate.) This is just another benefit you and I will get from the overspending of our out of control Congress.
Here are today’s numbers:
Dow Jones 30 Industrial – 11,584 (up 186 points)
10 Year Treasury Bond – 4.05% (no change)
Euro – $1.5577
Gold – $912 (down $14)
Oil – $126.77 (up $4.58)
Gasoline – $3.14 (up $0.12)
I had the same thought regarding a 50 year bond. Who would own it to maturity? The bond holder would probably mature before the bond does. My guess is that a 50 year bond is a trick of some kind. Maybe the USG wants to lock up their debt for 50 years because they are predicting higher rates in the coming decades and thus don’t want to refi shorter dated debt during a period of higher interest rates.
Bonds, notes, interest rates aren’t going to save us. Lower spending is the only option besides a massive currency devaluation (which isn’t a solution).
Hi David,
Yes, i think the government wants to pay off their 50 year debt with cheaper dollars as the dollar devalues (inflates).
It would be wonderful if the government understood how to spend less – but i don’t see many politicians willing to bite that bullet. That’s one reason Congress has it’s 9% approval rating. Without a budget surplus in the future, we are headed to an inflation solution – and while that’s not a real solution as it would kill everyone with dollars – it does bail out the USG.
You see, at the end of that inflation, the USG just issues new currency, and everyone just meets and has a party at the poor house.
Tom