Don't read too much in to the poorer-than-expected 30-year auction today. Yesterday's 10-year note auction was a blow out. This week's auctions were re-openings of existing treasuries. Both trade at premiums (30-year over 107). This precludes some institutions from purchasing. Next month we have truly new treasuries. That will be a better gauge of interest. Even with the large premium investors bot $12 billion 30-years at 4.00% versus an expected 3.99%. 4.00% does not indicate a desertion of long-dated treasuries by any means.
Why am I not enamored with the recovery? It comes down to jobs, wages and spending. During the past 20 years, spending in the U.S. grew far more than did wages. This was due to easy access to ever cheaper leverage. Those days are gone. at least for now. They never should have arrived in the first place. Without consumer spending, job growth will be tepid. Without job growth, wage growth will be lackluster and spending will suffer. The U.S. economy has improved and will continue to do so, but going forward the economy will look more like the 1950s than the 1990s or 2000s.
No comments:
Post a Comment