Some alarming budget stats/JGB yields up again/Experiential spend/Other

Ahead of the inflation stats this week, the response of interest rates and with a spotlight on the deteriorating US government finances, my friend Barry Knapp in his weekly Ironsides Macroeconomics piece highlighted the scary trends. From the CBO's Monthly Budget Review which came out last week, and for the longer run outlook, "Spending is running +6%, with social security +9%, Medicare +10% and refundable tax credits, primarily due to the expansion of Obamacare eligibility, also up 10% year-to-date from a year ago. These three categories account for 36% of year-to-date outlays. More shockingly, interest on the debt increased 42% year-to-date and has passed Medicare, Medicaid and Defense spending in total size." I bolded for emphasis. 

I know we all debate whether this all matters because for the last 40 years when debts and deficits started getting more attention it didn't matter. As I believe the 40 yr bond bull market ended a few years ago with the euphoric peak in December 2020 when there was $18.38 Trillion of negative yielding securities, and a bond bear market began soon after, I think this all matters now, especially since we still rely on the kindness of strangers in buying US Treasuries. By the way, there are now zero bonds in the world that have a negative yield, post the BoJ rate hike, good riddance. 

$ Value of Negative Yielding Bonds

While Jay Powell could change her mind, as can the economic data, Fed Governor Michelle Bowman said on Friday "I, at this point, have not written in any cuts" for 2024. "I've sort of had an even expectation of staying where we are for longer. And that continues to be my base case." She continued by saying "It is of utmost importance that we maintain credibility in pursuing our fight against inflation by proceeding carefully and deliberately to achieve our 2% goal." As a Governor, what she says matters but we know any new data point could change her opinion.