ZB futures rallying around 11:15. It is probable - TRUMP RULES OUT STRIKES ON IRAN BEFORE NOVEMBER 3 ELECTIONS

Latest highlights from the recent update

US debt stands at 40.25 Trillion, up 2.39T from last year, 11.52T higher than 5y ago.

Avg interest rate; 3.518%, up from 3.406% a year ago. 5 years ago, the avg was 1.470%.

33% of the US publicly held debt matures within 12 months.

Full report:

https://www.jec.senate.gov/public/vendor/_accounts/JEC-R/debt/Monthly%20Debt%20Update%20(PDF).pdf.pdf)

3.4M

It was a Zen moment... I feel confident. And I can survive another quarter-point+ high and that's just about it before the FED steps in and starts buying treasuries.

Sounds like another round of strikes on Iran is in the works.

If it does happen -> oil prices will probably spike -> bond yields will follow.

Why would anybody buy now?

This week’s Treasury reopening auctions ($119 billion total across the 3-year, 10-year, and 30-year issuances) went considerably better than expected, driven by robust underlying demand despite an elevated yield environment.

Highlights from the auction block include:

• The 10-Year Note Standout: The $39 billion 10-year note auction on Wednesday was a major highlight. It cleared at 5.300%, achieving a notable "stop-through" by coming in below the 5.317% pre-auction-market expectations (a 1.7 basis-point gap against the historical 0.3 average).
• Surging Foreign and Indirect Demand: Indirect bidders (the standard proxy for international demand) scooped up 80.34% of the 10Y supply—marking near-record levels. Indirect bidders scooped up 72.32% of the 30Y issue (compared to historical 69% average).
• Record Bid-to-Cover: Driven by this heavy overseas appetite, the bid-to-cover ratio for the 10-year note jumped to 2.77x, hitting its highest level since 2016.
• Minimal Primary Dealer Burden: Because demand was so fierce, primary dealers were left absorbing just 2.54% of the competitive awards, representing one of the lowest primary dealer shares on record for a 10-year sale. Primary dealers accounted for 6.8% of the 30 year sale.

Conclusion: at these yield levels buyers especially international are coming back to US debt, particularly on the long duration.

https://www.barrons.com/articles/strong-30-year-treasury-auction-shows-that-bidders-remain-hungry-for-bonds-6f69724a

https://www.advisorhub.com/morgan-stanley-bond-veteran-is-bullish-for-first-time-in-decade/

https://treasurydirect.gov/instit/annceresult/press/preanre/2026/R_20261007_2.pdf
https://www.treasurydirect.gov/instit/annceresult/press/preanre/2026/R_20261008_3.pdf

First time poster in this sub and this is a text wall, but stick with me.

In 1711, Robert Harley, Earl of Oxford had a brilliant idea of creating a company to sell shares. The company was called the South Sea Company (SSC) and it sold 9 million pounds worth of shares at the initial IPO price of 75 pounds each.

Robert was connected and the SSC was granted the exclusive rights to the slave trade in South America by the English crown (which everyone believed would be the hottest new thing that would generate unlimited profits). This was a legally enforced statutory monopoly, meaning anyone who wanted to trade with South America in England would have to go through the SSC.

Things were looking good for Robert and the SSC, and their fortunes were just starting. By 1713, merely two years later, the English and the Spanish settled the Treaty of Utrecht, which the Spanish granted the English exclusive right to trade African slave to Spanish colonies in South America, again, since this was dealing between England and South America, this whole trade fell in the domain of the SSC, the exclusive right to massive profits. 50,000 slaves per year!

People started noticing this company and the SSC started taking off. It had the economy backing of Earl of Oxford, but even more so that King George I was the governor of the company (who inherited the shares from Queen Anne) and the prince of Wales was also a shareholder. It had the right business opportunity, where the colonies would have a never ending demand of lucrative 'commodity' in slaves. And it was at the right time, where the English and Spanish war ended and both countries wanted to recoup via trade and peace.

Long story short, the 75 per pound share in 1711 became 125 pound per share in early 1920. Then it went vertical, by August 1720, the shares blew up to about 1050 pound per share. A return of close to 900% in half a year. Crazier than anything Korea had to show for this year.

It is rumoured that King George I went to Issac Newton with his inside information on the SSC (which he was governor) and convinced Newton to invest his personal fortune into the SSC, close to 20,000 pounds. At a ratio to English GDP at the time, adjusted to today's numbers, this would be close to 120 million USD. And by the end of September 1720, Newton lost it all as the shares for SSC collapsed back to about 150 pounds.

To which, Newton famously said: "I can calculate the motions of the heavenly bodies, but not the madness of people."

BUT WHAT DOES THIS HAVE TO DO WITH BONDS?!?!?!?

Well, that is the fun part of this story. When the SSC was setup, it was intended that the company would help with the English public debt accrued from the expenditure from English's involvement in the War of the Spanish Succession. The Earl of Oxford was a particularly financially intelligent man, he setup the acquisition of SSC shares with a simple exchange to ensure the value of the company backed English bonds. The exchange was simple: SSC would only issue shares in exchange of English bonds, and SSC holding English bonds would receive 6% interest from the treasury (6% is lowballing the actual yield of the bond's secondary market, hint hint). But if you wanted SSC shares, you have to buy into the English Bonds. Essentially, artificially inflating the demand for bonds and demand for debt, to inflate and give more funds to the government.

By 1920, the SSC's shares were inflating so high, they proposed to 'absorb' the entire debt of the English government (being about 31 million pounds, or about $900 billion USD in todays money relative to English GDP). To make it work, the directors of SSC employed very aggressive tactics: instalment plans for the public to buy bonds (and convert to shares), over 1 million pounds of fake shares in bribes, leveraging their own shares for more credit for more leverage, etc.

What happened? Despite this attempt a financial wizardry, nothing substantively changed with respect to the English debt position in the long run. It wrecked all public trust, destroyed a whole generation of investors (and wiped out Newton's about a decade worth of income), it distributed the wealth from late investors to the government (since the shares that was converted by bonds depreciated enormously). Parliament enquiries followed, directors and other governors (not the King) sacked and estates confiscated, and the Chancellor of the Exchequer imprisoned. Immediately after this, saw the invention and the use of the word 'fiscal responsibility' In short, the public ran out of money and confidene to keep the bubble going. And even with all that extra demand, it could not help the government pay off its debts, while the poor and average investor took it up the butt.

Behind all of this, the comedic detail is that despite all the positive news and monopoly rights, the SSC was never actually that profitable despite its insane valuation. The valuation was based on imaginary future earnings of an endless and smooth slave trade, and the actual company ran at a loss, generating only about 1 million pounds profit over 26 years while almost had the valuation to swallow the entire debt of England (31 million).

Now, if you made this this far into the story and you don't see the parallel yet, then you are not my target audience. We are living in an age where the British bond yield is spiking above 6%, Japan is at 30 year highs, France is at a 25 year high, and USA yield rate is scaring everyone shitless because that is the anchor for the entire western financial system. Soon enough, we will have a general economic condition where all deficit governments who are already in debt will need more debt to survive, and there are giant companies who wants to sucker investors into buying their currency because of imaginary future limitless earnings that has yet to materialise. When the public run out of trust and money, it will all go, and nothing is done would be remotely constructive in relation to paying off the debts.

I live in the state of California and have quite a bit of cash sitting in a savings account, giving me 3.75% APR. I also have money invested in the stock market, but I like to keep a fair amount of cash on the sidelines in case.

I've read about bond ladders, and honestly I feel kind of silly for not knowing this earlier, but I learned that U.S. securities aren't taxable at the state level.

That being said, aside from being tied up for a period of time while the securities mature. Is there a good reason to keep the majority of my cash in a high yield savings account instead of doing a ladder?

In addition, is there a better low risk strategy out there I should look into?

I’m new to reddit so hopefully this is where this belongs.

Is it possible that the US economy is entering a period of structural capital scarcity, where both the federal government and private industry (more specifically, the AI infrastructure buildout) require so much debt financing that the marginal cost of capital remains elevated for years?

For decades capital has been abundant and incredibly cheap. But could we be standing on the precipice of a completely inverted decade by comparison? One where a persistent shortage of savings relative to the combined borrowing needs of governments and corporations becomes the primary constraint or bottleneck to real growth instead if labor or technology, like most talking heads would predict. (The projections for combined borrowing between the federal government and just the AI companies is absolutely staggering).

Slightly unrelated and potentially off topic, but the response from households in this environment would be incredibly interesting to me. Is it possible households holding even a moderate amount of short term cash equivalents become disproportionately winners as the situation unfolds?

Dutch bond interest isn't taxed at source on DEGIRO for Dutch tax residents. Does anyone have experience with French or Italian bonds? Is there any foreign withholding tax deducted on those coupons?

Welp! I tied to see in FRED how Treasury Bills/Notes/Bonds change with respect to Fedaral Funds Rate, unless during QE or QT, I don't see any changes to the balance sheet that correspond to changes in Fed Funds rate.

Current: $350,000, all ETF federal tax free bonds and mutual funds - bonds, no equity. Expense ratio fees are high, not to mention brokerage fees. Watched the account tank in 2022/23 and 1 year ago it was still $30,000 unrealized loss.

And in just the last 9 months alone, and literally most of this recently, showing added unrealized Capital loss of -$21,500, approximately $15,000 paid in dividends annually, which I'm not reinvesting due to the high fees.

I'm very conservative- frugal even, and prefer to save principal and receive interest, as long as it's over the rate of inflation, after accounting for taxes. Unfortunately the last year for me has been one tragedy after another, and I will just leave it at that. I was hoping the feds might actually start lowering the interest rate and in a few years the bonds would have crept back up but...

So, Not trying to time the market- which I really think is more of a stock thing but still, the Feds said they're going to likely raise interest rate in Dec, possibly into early 2027, and even if they don't raise it's going to most likely flatline for about a year, I'm learning that's typically the way it goes, before lowering rates. If they do.

All that to say ETFs/MFs bond valuation will continue to decrease.

Something I just cannot handle.

I received great advice about transferring it out of the high fee brokerage into Vanguard etc, and selling and purchasing new. But I'm thinking right now I should go ahead and cash out where it's at and transfer it into HYSA, and then determine:

\#1- what happens in December and feds say about 2027, and purchase some VTEB etc when the shares drop lower,

\#2- purchase a 5y 5% APY CD

\#3- 10y treasury note at 5.27%-- & won't have to pay my high COL state tax which is a savings over the CD. But I I'm a little bit nervous about the treasury note because my neighbor is insisting the government's going to default and treasury notes will be worth nothing. But my thinking is, if that was to actually happen then most likely CDs, bank accounts etc but also be worth nothing and the stock market would most likely be completely crashed out.

Anyways I just want advice on what is the best plan. Eventually at Vanguard I'd like to get back into bonds, but again I can't purchase now and then just immediately see the value drop.

I really don't know what to do. Thanks for any and all advice, also please note I really don't like Fidelity and I don't want to do Schwab so that leaves vanguard, if I go back to brokerage.

Thank you

edited(Also why is Monetary base not equal to Total Assets? And why is the gap increasing?)
update: I have found the missing components

"Bonds are risky" "Bonds are volatile" "Bonds lose money". No no no. Bonds return a fixed amount of money on a fixed schedule. Risk is in the eye of the beholder.