U.S. debt is now close to 35 trillion U.S. dollars. The U.S. Treasury completed a two-year auction of U.S. Treasury bonds with an auction yield of 4.898% and a total amount of 69 billion U.S. dollars. On the 25th was a five-year auction of 70 billion U.S. dollars, and on the 26th was a seven-year auction of 44 billion U.S. dollars. This week alone, the amount of U.S. Treasury bond auctions was 183 billion U.S. dollars. According to the U.S. Treasury's U.S. debt auction plan, the total auction amount each month exceeds 300 billion U.S. dollars, and each quarter exceeds 1 trillion U.S. dollars, based on a benchmark interest rate of 5.5%.
If the interest rate is raised again, the US Treasury will go bankrupt. It cannot auction US debt every day, right? Now people buy US debt because the Fed is judged to be in a rate cut cycle from 2024 to 2025. The price of US debt will rise during the rate cut cycle. People buy US debt based on the expectation of future rise of US debt. Even if the increase of US debt is huge, people will buy it as long as the price is expected to rise.
Then the Federal Reserve actually raised interest rates. As long as the expectation of a rate hike is generated, no one will buy U.S. bonds, and the market price will fall. The further the market price falls, the more selling there will be, and finally all U.S. bonds will collapse. When U.S. bonds collapse, the U.S. dollar will collapse as well.
Let me share with you a little news: Buffett has been buying US bonds and reducing US stocks. The executives of the seven sisters of Nasdaq are all reducing their holdings. The reason is that they believe that the US economy has entered a recession. According to the Merrill Lynch clock cycle, in the recession cycle, bonds are king. Now you understand why Buffett does this! #BTC