One argument for last week’s extraordinary plunge in bond prices, which I explored as something that might happen this time of year in one of my earlier Premium Posts, was that bond prices could get crushed by the supersized US treasury auctions planned for September and October as the government makes up for its inability to issue new debt during the debt-ceiling standoff.
While pointing out the concern to patrons, I decided in the end for my own investment purposes that the Fed’s termination of quantitative tightening and its return to reducing interest rates would likely offset the impact of the government’s sudden debt expansion. Evidence is solid so far that the ballooning treasury auctions have not been the cause of the sudden collapse in bond prices (rise in yields).
(I also got out before the carnage of last week.)
