Dylan Ratigan: “Last week, with total US government debt north of $40 trillion, the Treasury attempted to manipulate long-term interest rates using two different techniques. It announced it would at least double its purchases of long-term government bonds, and it moved to buy back far more of its own debt than planned. The goal was to push down borrowing costs after the 30-year Treasury yield hit its highest level since 2007 — a nineteen-year high. The market moved for about a day. Then yields climbed right back to where they started. Then, on Friday, standing on the tarmac before boarding Air Force One, the President was asked whether he’d directed the Treasury Secretary to intervene, and whether another type of intervention was coming. He said this: “The ultimate intervention is our military. And if we have to use that, we will.” I want to sit with that for a second, because the reflex is to treat it as a gaffe and move on, and I think that’s a mistake. Screaming in a Bloomberg newsroom over a bond story and a president invoking the military in response to a bond question are, structurally, the same signal. Both are people responding to the fact that this market matters more than almost anything else in the world. The bond market gets almost no coverage. Ninety-nine percent of Americans could not tell you what happened in it this week and have no reason to care. But, It sets the price of everything on earth.
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