Source? Every indication is that dollar-denominated financial assets are tremendously in demand. (What metric are you looking at?)
The Fed has been reducing rates while selling assets, all while U.S. public debt explodes. The Treasury is selling more debt. The Fed is selling debt. Rates went up, and then they went down. That means there is, ceteris paribus, more demand outside the Fed and Treasury than there was when Russia invaded Ukraine.
It isn't cetiris paribus, the Fed rate tells us nothing about demand because they purposefully devalue the dollar. The entire world could be refusing to accept US debt except Broke Boris and they could technically negotiate a 4% rate with just him. Assessing demand for US debt has to be linked to real goods/services/assets somewhere along the line or there just isn't anything to say. The BRICS arguably make up around 40% of the world's economy and they appear to be either slowly evacuating or less-interested in treasuries [0]. It is by no means clear that US debt demand is up or even stable.
Great time to own gold, unfortunately. I wish mine had been a bad purchase but with all the "real growth" it has been experiencing I'm probably going to need a bigger vault box.
I wish I was more sophisticated in these areas. But I'm not. My fear isn't so much reduction in USD is our American stupidity in current account deficits, and debt which is to precisely point fingers at our insipid Congress. The last gasp --- which proved to be all air --- was Paul Ryan who was gonna try to fix things. Since that time it's a combination of we didn't, and we can't, plus reactionary moves. In so doing we're just wasting our soft power here. The other head wind is trade deficits. But unlike that, our budget and it's knock on effects is more directly in control.
I once ran into Tom Keene of Bloomberg news around 2014. In discussing this his view of Washington's view was we can print whatever we want. I was surprised he didn't criticize that ... but it's stuck we me ever since.
The 10-year Treasury rate has more than doubled since 2001. I skipped Econ 101 - If you have to pay people twice as much to take your debt, is there more or less demand for it?
Extend range to "Max". Yields in 2001 -- looks like the peaked at about 5.4%. Yields today are about 4.13%.
What am I missing?
Also, this phrase... is a strange one.
> If you have to pay people twice as much to take your debt, is there more or less demand for it?
If your economy is running red hot (with relatively low inflation rate), then the central bank normally raises interest rates. Yields on central gov't debt will closely follow these rises. Controversially, I will say within a "reasonable" yield range (maybe 1% to 8%), the yield itself says very little about demand for it. Before COVID-19, Germany's 10 year gov't debt yield was frequently zero or slightly negative. Again: What does this say about demand for it? Not much.
You are mistaking owning US debt and having your debt denominated in dollars. Many foreign countries find it desirable to own US treasuries, but they don't want to borrow dollars and have a dollar-denominated debt. When that happens, and your own currency is devalued, you still owe the same number of dollars. You now have to buy these more expensive dollars to repay your dollar-denominated debt.
People want to be dollar debtors, not dollar creditors.
When I said no one wants dollars, I was referring to people's willingness to hold actual dollars or obligations that pay them dollars in the future.
Your other comment mentions the AI bubble, and also makes me think you don't understand what I'm saying, since we seem to agree about what happens to dollars and debt in a bubble.
Companies are glad to take dollars now in exchange for owing dollars in the future (something they would be less willing to do if the dollar was strong).
They then turn around and spend those dollars on GPUs and electricity.
They think they can get more done with a dollar this quarter by trading it to NVIDIA or a power company than by holding T bills.
Fed rates do not track the real demand to be a dollar creditor.
That's kind of the point, the Fed is the lender of last resort.
If no one wants to give dollars now for more later, then the Fed becomes a creditor to the treasury at an arbitrary rate.
