Comment by pandaman
2 months ago
Treasuries are not some kind of artifacts that can be stored indefinitely, they are bonds with maturity dates. As they mature they turn into cash automatically and that cash used to come from selling new treasuries. As the demand dwindles the US has to sell its bonds cheaper thus borrowing at higher interest and that interest will have to be paid by selling even more treasuries at even higher interest so it's already a feedback loop.
> As the demand dwindles the US has to sell its bonds cheaper
To be clear, we see no indication of this. (The Fed reduced its balance sheet in the last 3 years on the order of the GDP of Spain or Brazil [1][2].)
[1] https://www.federalreserve.gov/monetarypolicy/policy-normali...
[2] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...
Not sure what your links are supposed to prove but here is the link[1] to the actual yield on the 10 year bond, higher yield means the bond is sold at higher discount i.e. cheaper.
1. https://fred.stlouisfed.org/series/DGS10/
> higher yield means the bond is sold at higher discount i.e. cheaper
Yes. The Fed set a policy of higher rates. It did that by selling bonds and driving the price up.
Then it set a policy of reducing rates, and was able to do that by just selling fewer bonds. Not buying them. That implies strong demand for these assets. (You can’t use price as a proxy for demand in Treasuries since it’s an explicitly manipulated price by its issuer.)
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