October 2023

The good news is that we survived September and the threat of a federal government shutdown. The bad news is that we started October with surging Treasury bond yields, so concerns over out-of-control federal spending persist. The federal debt ceiling was lifted with a 45-day funding plan, and when it has to be renewed in November, it should pass, since Congressional members like to go home for Thanksgiving.

The public fascination with government bond yields has gone viral. For example, Treasury bonds were recently #2 in Google’s search engine, behind only the Taylor Swift/Travis Kelce relationship. This is undoubtedly undermining confidence in the federal government, since there is a perception that many things are out of control, including the southern border, which caused former President Bill Clinton to say that work restrictions on illegal immigrants make no sense. The U.S. budget deficit is also running out of control, due to many factors, like the ongoing aid to Ukraine, which is funding a proxy war with Russia.

Treasury bond yields have moderated somewhat in October, despite disappointing inflation data for both the Consumer Price Index and Producer Price Index in September. Furthermore, the Federal Open Market Committee (FOMC) minutes revealed that many Fed voting members …