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US Dollar & Confidence in US Treasury at a 10 Year low


snowyco

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Bloomberg is reporting that the US Treasury Bills are at their weakest point in 10 years.

Bloomberg also reports that due to a loss of confidence in the US Govt's ability to repay debts,   free market confidence in US Govt economic policies is at its lowest point in 10 years, forcing the US Govt to pay the most interest in 10 years    to get buyers to buy our debt.

Bloomberg further reports that   free-market  "Bond Enforcers"   (private buyers) are punishing US Govt's the excessive debts & profligate spending ($800 billion in new additional Military Spending +plus $1.5 Trillion in tax giveaways to the already wealthy) -   criticizing the last 14 months of record deficit-growing  US govt. economic policies.

These factors are also driving US Dollar weakness vs the MXN Peso (now at $18.6 : $1 USD) ... as the US 10 Yr Treasury Notes now have to pay 2.88% on 10 yr notes versus the past interest rates  down at just 2%.in 2016  ... This means that the current US government must pay 44% higher interest payments on our debt,  than back in 2016.

These trends of US Govt economic policy weakness are also reflected in the British Pound at $1.39 (vs $1.22 in 2016)   ... and the Euro is now at $1.24  (vs. $1.05 in 2016).

Notice that none of these Bloomberg analytical conclusions include the likely effects of Washington's latest proposed trade war with Japan, Germany, South Korea, Gr. Britain & other allies.

For all these reasons,  it appears that the US Dollar is not likely to gain much on the MXN Peso in the near future.

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Well that all depends on the next election in Mexico.  Our investment bankers predict the Peso could go as low as 25 if AMLO is elected and NAFTA fails but only for a short time once the market figures out he doesn't have horns and NAFTA goes on in some form because none of the three countries can afford to kill it completely. 

Historically the Peso tends to track the dollar and has been trading in pretty much the same range since the first of the year well before the trade policy changes were announced.

To "play" the election one can shift Peso holdings into dollar accounts here.  But it is a long time until July.

 

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8 hours ago, pappysmarket said:

Wow, they must have forgotten to tell "the folks". My conversion app said 18.60 Friday and today it says 18.61.


Yeah,  the "folks" often aren't up to speed with the current Treasury Department's official auction rates.**

Bloomberg - especially their terminal feed news - stays on top of the latest facts,   without the spin of Fox News et al.   Of all the major news feeds,  only PBS (Nightly Business Report)  & Bloomberg reported how we hit a 10 year record lack of confidence in US government debt  ... reported as the benchmark 10 yr interest rates from today's auction.

It was Bloomberg who used the term:  'Bond Enforcers'    to describe the disciplined free-market folks who buy Govt. Treasury notes, effectively setting the 'free-market' rates.

The loss of confidence in the US Govt news is also mirrored by financial market analysis reporting from German sources. ...  Even before the announcement of USA's planned  tariffs on steel & aluminum, two different big German sources previously reported 9 out of 10 Germans now no longer trust Washington's 'leadership'.     For comparison of what's reasonable,   the current 9 of 10 Germans losing confidence in Washington compares poorly with the previous 2016 German reports of 9 of 10 Germans having high confidence in US leadership.

This past year's history of fiscal~economic predictions on Chapala's Webboard?
6 months ago Pappy disagreed strongly .about Bloomberg, PBS et al's  proposed continued loss of confidence in US economic & tax policies, when the US dollar had already lost 10% of it's value against the Euro ($1.15 US Dollar to Euro)  an Pound ($1.34 USD to Pound)   - as last summer & fall, Pappy promoted~predicted  a brighter US future,  while Bloomberg predicted that the sliding 2.35% US Govt 10-yr benchmark interest rates showed growing US govt economic weakness, Pappy disagreed ...  Reality:   the US Dollar has slid weaker by yet another 7% since then ... and the US Govt 10 yr benchmark rate has continued to slide to a 10 yr record weak level of    2.88% ...  (a 22% slide weaker for US Treasury notes since last summer).

Even as Pappy reassured us ...  the US Treasury notes slid another 22% - causing the US taxpayers to now pay 22% higher interest on the historically high growing US public debt,   as the Germans are still paying just   0.62%   on their 10 yr notes to finance their debt.

Which   interest would you like to pay to creditors?   
2.88% interest?   or   just   0.62% interest?

These esoteric sounding things lead to some brutal future Math
The Germans are paying a total of just  7% Total interest  over 10 years on their debt, due to confidence in the German economic management & leadership,

while Americans are paying a total of   33% Total interest  over 10 years on our debt,  due to a lack of confidence in the US economic management & leadership,

Pappy points out that the MXN peso did not change over the weekend,  but the USD:MXN peso exchange rate is quirky:
**When analyzing US-Mexican economic data,  always keep in mind that   the US 'dog'  generally   wags  the Mexican 'tail' ... (because the US-Mexico is the biggest trade partnership in the world - and Mexico is the minority-partner)    so US economic  weakness   generally translates into weakness for the Mexican economy =>  the MXN peso will likely   not   strengthen   as US govt economic performance continues to slide,   because   US Govt economic policy weakness also drags down the MXN peso & drags down the Mexican economy.
...    " It's tough sharing a bed with an elephant. "
:(

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You know this is so full of nonsense it is hard to know where to start. 

10 year low?  We could start by looking at the historic Euro rates.  Remember when the Euro cost a buck and a half?  Yep, and that was during the previous administration.  It was high $1.30's to the $1.50 level the entire time.  Look it up.

$1.23 today, that means the buck is worth more.  Not as much as it was but over the longer term still at the higher end of the scale.

And the Peso?  14 to the buck for most of the last administration, over 18 for this one.  Yep as high as 22 for a brief period based on as reported at the time a reaction to less than favorable news here.  Trading in a relatively tight range since then.

As a matter of fact when you start looking at the longer time charts it is clear the buck is still pretty pricey.  Among other things that is a contributing factor to the U.S. trade deficit.  What does the IMF say about the dollar?

https://www.reuters.com/article/us-imf-currencies/imf-says-dollar-overvalued-euro-yen-yuan-broadly-in-line-with-fundamentals-idUSKBN1AD1YT?il=0

Quote

WASHINGTON (Reuters) - The International Monetary Fund on Friday said that the U.S. dollar was overvalued by 10 percent to 20 percent, based on U.S. near-term economic fundamentals, while it viewed valuations of the euro, Japan’s yen, and China’s yuan as broadly in line with fundamentals.

You are fooling no one here Snowy by trying to make a political statement here.  However when one just takes a quick look at the historical charts it appears you have no case.  If anything the dollar is still overvalued based on long term averages.

Give it up.  The numbers over 10 years belie your thread title.  Ten years ago when we arrived the buck would only buy 11 pesos. The Euro cost $1.57.

 

 

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59 minutes ago, snowyco said:


Yeah,  the "folks" often aren't up to speed with the current Treasury Department's official auction rates.**

Bloomberg - especially their terminal feed news - stays on top of the latest facts,   without the spin of Fox News et al.   Of all the major news feeds,  only PBS (Nightly Business Report)  & Bloomberg reported how we hit a 10 year record lack of confidence in US government debt  ... reported as the benchmark 10 yr interest rates from today's auction.

It was Bloomberg who used the term:  'Bond Enforcers'    to describe the disciplined free-market folks who buy Govt. Treasury notes, effectively setting the 'free-market' rates.

The loss of confidence in the US Govt news is also mirrored by financial market analysis reporting from German sources. ...  Even before the announcement of USA's planned  tariffs on steel & aluminum, two different big German sources previously reported 9 out of 10 Germans now no longer trust Washington's 'leadership'.     For comparison of what's reasonable,   the current 9 of 10 Germans losing confidence in Washington compares poorly with the previous 2016 German reports of 9 of 10 Germans having high confidence in US leadership.

This past year's history of fiscal~economic predictions on Chapala's Webboard?
6 months ago Pappy disagreed strongly .about Bloomberg, PBS et al's  proposed continued loss of confidence in US economic & tax policies, when the US dollar had already lost 10% of it's value against the Euro ($1.15 US Dollar to Euro)  an Pound ($1.34 USD to Pound)   - as last summer & fall, Pappy promoted~predicted  a brighter US future,  while Bloomberg predicted that the sliding 2.35% US Govt 10-yr benchmark interest rates showed growing US govt economic weakness, Pappy disagreed ...  Reality:   the US Dollar has slid weaker by yet another 7% since then ... and the US Govt 10 yr benchmark rate has continued to slide to a 10 yr record weak level of    2.88% ...  (a 22% slide weaker for US Treasury notes since last summer).

Even as Pappy reassured us ...  the US Treasury notes slid another 22% - causing the US taxpayers to now pay 22% higher interest on the historically high growing US public debt,   as the Germans are still paying just   0.62%   on their 10 yr notes to finance their debt.

Which   interest would you like to pay to creditors?   
2.88% interest?   or   just   0.62% interest?

These esoteric sounding things lead to some brutal future Math
The Germans are paying a total of just  7% Total interest  over 10 years on their debt, due to confidence in the German economic management & leadership,

while Americans are paying a total of   33% Total interest  over 10 years on our debt,  due to a lack of confidence in the US economic management & leadership,

Pappy points out that the MXN peso did not change over the weekend,  but the USD:MXN peso exchange rate is quirky:
**When analyzing US-Mexican economic data,  always keep in mind that   the US 'dog'  generally   wags  the Mexican 'tail' ... (because the US-Mexico is the biggest trade partnership in the world - and Mexico is the minority-partner)    so US economic  weakness   generally translates into weakness for the Mexican economy =>  the MXN peso will likely   not   strengthen   as US govt economic performance continues to slide,   because   US Govt economic policy weakness also drags down the MXN peso & drags down the Mexican economy.
...    " It's tough sharing a bed with an elephant. "
:(

Imagine how low the US interest and other payments could go if they simply stopped wasting all that money on foreign aid, UN payments, defending Europe and every other God-forsaken land?  Why they might actually be rich.

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9 hours ago, pappysmarket said:

Imagine how low the US interest and other payments could go if they simply stopped wasting all that money on foreign aid, UN payments, defending Europe and every other God-forsaken land?  Why they might actually be rich.


Going with facts,  the current US Military spending budget is the biggest item up at $780 Billion a year, which equals 61% of USA's Federal discretionary budget. 

Military spending was at at 53% under Bush~Cheney & Obama~Clinton to keep US troops in over 75% of the world's countries.

In comparison,  US Foreign aid has been down at $50 Billion ... 4% of the budget.

If someone offered you $780,000 for your house ... and a second buyer offered you just $50,000 ... which offer would you take?

The real US interest payments:
Does it make sense to saddle our kids & grandkids with a fresh $1.5 Trillion a year of new public debt ... debt that is calculated to cost our grandkids 64% of their future Federal budgets   on JUST interest payments on   our Debt   that our generation over-spent ?


Does it make sense to bankrupt our grandkid's futures   to pay for us to   keep  US troops in 75% of the world's countries?

As long as people keep  believing  that   ~ 4% spent on Foreign aid   and  ~ 7% spent on helping USA's poor people (80% who are elderlies, little kids & disabled people)    are causing the USA's historic record economic problems,  we'll never fix the real problems

 

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Going with facts you completely failed to make your case about the U.S. dollar so now there's a new set of facts.  Curious, where were you when the last administration ran up a trillion dollars in debt?  I think you are a little late to the game here.  This has been going on for a helluva long time.

Post WWII the U.S. political establishment concluded the U.S. needed to police the world and they have pretty much done so ever since.  I agree with you they can't really afford it but the idea that one side or the other is any more guilty is nonsense.  Until the voters up there put a stop to it I suspect it will go on until the roof falls in.

And as you well know U.S. politics are not a welcome topic on this board.  So I suggest you end it here.

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11 hours ago, Mainecoons said:

Interest rates too are still at historically low levels, creating a problem for savers and retirees.

United States Fed Funds Rate

have to get the rates higher to lower them when the recession hit and it will. Or else we may have to pay banks to keep our money. Negative interest rates.

 

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11 hours ago, Mainecoons said:

Going with facts you completely failed to make your case about the U.S. dollar so now there's a new set of facts.  Curious, where were you when the last administration ran up a trillion dollars in debt?  I think you are a little late to the game here.  This has been going on for a helluva long time.

Post WWII the U.S. political establishment concluded the U.S. needed to police the world and they have pretty much done so ever since.  I agree with you they can't really afford it but the idea that one side or the other is any more guilty is nonsense.  Until the voters up there put a stop to it I suspect it will go on until the roof falls in.

And as you well know U.S. politics are not a welcome topic on this board.  So I suggest you end it here.


Please note the title of the thread:
US Dollar & Confidence in US Treasury at a 10 Year low

Reporting Bloomberg's financial reports about the latest Treasury note auction results, compared to the previous 10 years does not seem "political" to me.  

"Bloomberg is reporting that the US Treasury Bills are at their weakest point in 10 years.

Bloomberg also reports that due to a loss of confidence in the US Govt's ability to repay debts,   free market confidence in US Govt economic policies is at its lowest point in 10 years, forcing the US Govt to pay the most interest in 10 years    to get buyers to buy our debt.

Bloomberg further reports that   free-market  "Bond Enforcers"   (private buyers) are punishing US Govt's the excessive debts & profligate spending ($800 billion in new additional Military Spending +plus $1.5 Trillion in tax giveaways to the already wealthy) -   criticizing the last 14 months of record deficit-growing  US govt. economic policies."


These are not my conclusions, and they are not my points:  I simply pass along the factual reports from Bloomberg, from German financial reports, and the Nightly Business Report.  Readers can draw their own conclusions, as the US dollar now buys significantly fewer British goods,  significantly fewer German goods,  fewer Japanese goods than it did in 2016.

Financial experts in the USA, Gr. Britain, Japan (NHK news) and  Germany are reporting that the US dollar weakness is due to Germans, Brits, Japanese, et al have been losing confidence in US economic policies during 2017 & 2018.  These are Bloomberg, NHK, FT, DW, & NBR reports of fiscal data - they are not "my points".

The US Govt. spending amounts I report come from the official CBO fiscal spending data.

The facts on the weakening US dollar comes from the IRS-recommended XE.com 's official historical exchange rate charts.

Notice how the USD has fallen  15% weaker vs the Euro since 2016:
https://www.xe.com/currencycharts/?from=USD&to=EUR&view=2Y







 

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