AI Summary
5 min readA tale of two deficits
The U.S. Treasury is about to auction off another round of government debt this week, and the bond market is already jittery. Two weeks ago, auctions for two-, five-, and seven-year Treasuries went poorly—demand was much weaker than expected. Winnie Caesar, head of strategy at Credit Sites, described the year for U.S. rates as "death by a thousand paper cuts." Those cuts include concerns about long-term government debt, higher energy prices feeding inflation, and stronger-than-expected economic data. Investors are also uncertain how the Federal Reserve will react, all while oil prices and macro data create noise. Alex Wolf at JPMorgan said it's "a difficult environment for those participating in markets to know what is the right level of yields." Chris Lowe at FHN Financial noted rates are higher across the board, and traders are signaling that their primary concerns—inflation, excessive government spending, excessive government debt—"are going to remain in place." That means investors think interest rates will keep rising. The average 30-year mortgage hit 7.61%, according to Mortgage News Daily.
The strong dollar and what it's hiding
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What you'll learn
- 1 (01:01) **Big Picture: Bond Market Jitters** - The Treasury Department is auctioning new debt, and recent auctions have shown weak demand, signaling investor concerns about the economic future.
- 2 (04:15) **The Strong Dollar's Double-Edged Sword** - The dollar is at its strongest in 18 months, which is good for some but signals deeper economic issues.
- 3 (06:42) **Interview: The Invisible Hand of Maria Edgeworth** - A conversation with New York Times Brussels Bureau Chief Gina Smialek about her new book on a forgotten female economist.
- 4 (12:49) **The Real Reason for the Trade Deficit** - Sari Benishore reports that the U.S. trade deficit is driven more by government deficit spending than by trade policy.
- 5 (17:28) **Electric Trucking Gains Momentum** - High diesel prices and new incentives are accelerating the shift to electric trucks for delivery companies.
- 6 (22:04) **The Baby Algorithm and Sleep-Deprived Parents** - A report on how the $60 billion baby product industry targets new parents, especially in the U.S.
- 7 (27:28) **Final Note: Eurozone Déjà Vu in France** - A brief reminder that France's debt levels and political gridlock are driving the Euro down and raising fears of a new debt crisis.
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Guests on this episode
Show Notes
Despite Trump’s best efforts (a flurry of loosely targeted tariffs), the U.S. trade deficit is widening. But why is it widening? And what does it all have to do with foreign investment in government debt and the strength of the U.S. dollar? We’ll explain. Plus: Electric truck sales rev up amid record-high diesel prices, a 19th-century novelist popularized economic theory for her broad audience, and investors prep for upcoming Treasury auctions.
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Read the stories in today’s episode:
- What exactly are investors looking for in this week's government bond auctions?
- The U.S. dollar is at its strongest in 18 months
- The Regency-era novelist who popularized economics through her books
- Here's why the trade deficit is growing
- As diesel prices soar, so do electric truck sales
- The algorithm knows you have a baby, and it will exploit that
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