Foreign buyers are pulling back hard on U.S. Treasuries—net purchases dropped 58% through July, a $410 billion decline. Meanwhile, Washington keeps borrowing.
If the Treasury market needs higher yields to attract new buyers, refinancing costs climb and the interest bill balloons.
The likely Fed response if Treasury markets freeze? Inject liquidity rather than let contagion spread. No one can predict the exact yield or timing that forces intervention, but fiscal discipline won't magically appear in a crisis.
Expect another round of money creation under a new technical label.
If the Treasury market needs higher yields to attract new buyers, refinancing costs climb and the interest bill balloons.
The likely Fed response if Treasury markets freeze? Inject liquidity rather than let contagion spread. No one can predict the exact yield or timing that forces intervention, but fiscal discipline won't magically appear in a crisis.
Expect another round of money creation under a new technical label.
