U.S. Government Borrowing Costs Are Going Higher

[MUSIC PLAYING] Hey guys, good afternoon. It’s Scott Garliss,
at Stansbury Research. Today is Tuesday, February 20th. This is your
Newswire MarketWatch. Markets are lower
this afternoon. The Dow’s off over 1%. Basically, what’s going on
here is Walmart set the tone early this morning. They came out and reported
earnings weaker than expected on EPS, but better
than expected revenues. But their guidance was
disappointing them. What’s going on here
is e-commerce revenues came in much weaker
than expected. That’s not good. People were really
look for growth here and the concern is
Amazon is stealing market share from Walmart. Also, what we had was the
treasury is $258 billion worth of auctions this week. Today, in particular,
was a record setting day, $179 billion worth of auctions. It was the three
in six month bills. The four week bill
and the two year note, the things that
really stood out here were bid to cover ratios were a
little bit weaker than expected of note. Let me see here. The stats I’m looking at,
the four week note offering, the bid to cover was
the lowest since 2008. So right before the
financial crisis, and also in the two
year note the offering sold the highest yield
in almost a decade. So again the bid to cover
ratio was weak there. When we say bid
to cover ratio, we are talking about demand
versus what is offered. Typically in these auctions,
a bid to cover ratio tends to run around 2.8 to 3x. Not the case today. So this is a good
case for the shorts to say borrowing costs
for the US are going up. This is going to be
bad for bond prices. This is why we’re seeing
the market go lower today. Also tomorrow, we get a
couple of things going on. First, we’re going
to get global growth data in terms of flash PMI. From the Eurozone,
Japan, and the US, I would expect them
to be good numbers. But you can make the case,
how much better can they be? Also the other thing
coming out tomorrow, is FOMC minutes from
the most recent meeting. What people are going to
be concerned about here is if the US is seeing
a pickup in growth. What does that mean for the Fed? Thanks a lot for tuning
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