US Treasury Short Curve Remains Steeply Inverted As Yellen Warns ‘Time Is Running Out’ Ahead of Biden-McCarthy Meet (Treasury Cash Balance Getting Really Low)

I used to think that The Kabuki Theater surrounding the raising of the US debt limit and passing a Federal budget would be over by now. But since Biden is being controlled by the hard left “Progressives” in Washington DC, he may be reckless enough to let the US default just so he can blame Republicans. And with our useless and deeply-biased main street media (MSM) just repeating Democrat talking points blaming Republicans, we may actually see a US debt default.

So while Yellen is warning that time is running out, notice she never encourage Blaming Biden to negotiate his insane budget downwards, we see a deeply inverted US Treasury short curve (2Y-3M).

(Bloomberg) Treasury Secretary Janet Yellen warned that “time is running out” to avert an economic catastrophe from failing to raise the debt ceiling, in remarks released as President Joe Biden and congressional leaders prepared to meet on the standoff.

Speaker Kevin McCarthy issued his own notice Monday evening ahead of Tuesday’s 3 p.m. gathering, saying, “We only have so many days left to deal with this.”

The two sides showed little signs of agreeing on much else other than the countdown in the runup to the second White House encounter on the debt ceiling in two weeks. While senior staff have been negotiating for days, Republicans are still pressing for sweeping spending cuts, while Democrats are determined to protect the president’s legislative achievements.

“We are already seeing the impacts of brinksmanship: investors have become more reluctant to hold government debt that matures in early June,” Yellen said in remarks prepared for delivery to a banking conference on Tuesday. “The impasse has already increased the debt burden to American taxpayers.”

The Treasury chief issued a fresh letter to congressional leaders Monday restating that the Treasury risks running out of sufficient cash for all federal obligations as soon as June 1. The livelihoods of millions of Americans “hang in the balance,” she said in excerpts of her speech to the Independent Community Bankers of America Capital Summit released by the Treasury.

There is the evil Hobbit! Sending a letter to Congress essentially blaming McCarthy for the fiasco when Biden could downsize his budget request to reasonable levels. But Yellen is an authoritarian Statist, not a free market type.

The Empire Strikes Out! Empire State Manufacturing Business Conditions For May Tanked By -31.8 As Fed Slows M2 Money Growth

Between Covid and Joe Biden’s Reign of Error, the US economy is slippin’ into darkness. As Biden gets yet another nickname: Darth Biden!

The Empire State (crime plagued New York) manufacturing survey general business conditions crashed in May to -31.8.

Notice that business conditions peaked shortly after The Fed’s money printing peaked. It has been all downhill since.

Crisis? US Loan Demand Weakens By Most Since 2009 Financial Crisis (Bidenflation + Fed Rate Hikes = Collapsing Loan Demand)

Inflatiion Joe Biden (or Unaffordable Joe). Bidenflation has led to The Federal Reserve tightening interest rates. As I said on Stuart Varney’s show years ago, “When The Fed starts raising rates, KABOOM!”

Now we are seeing US Loan Demand weakening by the most since the 2009 financial crisis.

Then we have large/medium sized banks reporting a crash in stronger demand for C&I loans.

Call Biden “The Recession Hessian.”

Biden’s Inflation Nation! REAL Weekly Wage Growth Negative For 25 Straight Weeks, REAL Home Price Growth At -3.5% YoY As M2 Money Growth At -4.1% YoY (Largest Drop In REAL Home Price Growth Since 2012)

I wish Biden would spend more time trying to negotiate with McCarthy to end the debt crisis rather than stir up race hatred like he did at Howard University graduation. C’mon Joe! White “supremacy” is not the most dangerous terrorist threat. I would actually say that Biden, Yellen and Schumer (throw in Pelosi’s spending splurge as Speaker) are the biggest terrorist threat. They are the 4 horsemen of the US debt apocalypse.

Let’s see how Bidenflation (caused by staggering Federal misspending) and years of Yellen’s TLTL (too low too long) monetary policy has caused a massive dislocation in the housing market.

The February Case-Shiller National home price index less core inflation (CPI less food and energy) year-over-year is declining by -3.5%. This is happening as REAL average weekly earnings growth is at -1.06% YoY and has been negative growth for 25 straigth months.

Look at The Fed’s massive overreaction to the unnecessary government shutdowns of economies and schools. It really sent home price growth soaring, then when The Fed starts slowing the monetary stimulus, we get the largest slowdown of REAL home price growth since 2012.

The 4 Horsemen of the US Debt Apocalypse. I would add Mitch McConnell and Fed Chair Powell, but then would have an entire Cavalry company like George Armstrong Custer had at Little Big Horn.

Biden Country! No Rent Being Paid On 20% Of US Office Space As Office Property Values Fall (Office Vacancy Hit An All-time High As Fed Shrinks Balance Sheet)

Living in Biden Country! Where big American cities are becoming like Lori Lightfoot’s Chicago.

And the sad headline of the day (other than pure chaos on the Mexican border) is that NO RENT IS BEING PAID ON 20% OF ALL US OFFICE SPACE! And small banks hold 70% of commercial real estate loans!

Things are so bad, in fact, that 26 Empire State Buildings could fit into New York City’s empty office space, as occupancy in the city is hovering around 50% of prepandemic levels,

As The Fed momentarily pauses rate hikes, office vacancy rate just hit an all-time high. Another Biden first!! And the NCREIF office property index falling as The Fed tightens.

Yellen Says Only Good Outcome Is Congress Raising Debt Ceiling (US CDS Remains Elevated As Child-like Biden Refuses To Negotiate The Debt Ceiling)

Treasury Secretary Janet “The Evil Hobbit” Yellen is a Statist. She can only think of an all powerful central government calling the shots since the private sector and individual liberties are something to be eliminated.

So, it is not surprising that Yellen is pushing for Congress to raise the debt ceiling without conditions. Even Democrat Senator Joe Manchin is saying that Biden is ‘Hypocritical’ On Debt-Limit Demands’.

Yellen has mostly declined to spell out what her department would do if Congress fails to raise or suspend the debt limit before the Treasury finds itself unable to cover all the government’s obligations.

Back in Mordor on The Potomac, President Joe Biden and House Speaker Kevin McCarthy postponed a meeting on the debt ceiling set for Friday. People familiar with the talks said the postponement was a sign that staff-level talks were yielding progress.

Biden and congressional Republicans have been locked in disagreement for weeks over raising the US federal government’s $31.4 trillion borrowing limit. GOP leaders have demanded promises of future spending cuts before they approve a higher ceiling. Biden has jinsisted on a “clean” increase, with budget talks kept separate.

Now what no one in our lame pro-government media or Congress or Administration has said is the a US debt default does NOT necessarily mean that the US walks away from its debt. Very likely, China and Japan, our two biggest foreign debt holders, will insist on debt restructuring so that the US pays some fraction of debt owed, like 80%.

But foreign debt holders are a relatively small percentage of US debt holders. The Federal Reserve is the largest single borrower, thanks in part to Yellen who has formally Federal Reserve Chair,

Of course, financial entities like Vanguard, Blackrock and Fidelity are the largest holders of US debt. Since pensions invest heavily with these enetitites, the Federal government would restructure the debt rather than outright default.

US CDS 1Y continues to remain high as Biden/Yellen/Schumer play chicken with the lives of the American middle class while the political donor class is clamoring for endless spending and wealth transfers.

Remember, Biden, Yellen and Schumer all Statists and believe that their job is growing Federal government to wear it is all powerful and their donors get billions in subsidies and wealth transfers. You don’t think green energy subsidies make any common sense, do you? Wind turbines (aka, whale and eagle killing machines) are ineffective. We need nuclear power but Progressives fear nuclear power as much as they have Donald Trump.

Life During Biden! Mortgage Rates UP 140%, Core Inflation UP 291% Under Unaffordable Joe (Fed Pausing Rate Hikes Even As Prices Continue To Soar)

Life under Biden.

Bankrate’s 30-year mortgage rate is down slighty to 6.89%, but that masks the reality that mortgage rates were only 2.88% when Biden was sworn in as President. That is a staggering increase of 140 in the 30-year mortgage rate.

In fairness to Unaffordable Joe, Congress went on a crazy spending spree with Covid, much of which had nothing to do with Covid. Green energy spending for the donor class is helping drive core inflation up 291% since Biden was installed as President.

And yes, The Fed is playing catch up for former Fed Chair Janet Yellen’s “Too low for too long (TLTL) monetary policy. So, now she is creating mayhem as US Treasury Secretary. And she was a terrible Fed Chair, now a terrible Treasury Secretary.

And yes, The Fed looks like they are pausing rate hikes.

Housing Under Biden: Mortgage Demand Increases 6.3% Since Last Week On Rate Declines, But Purchase Demand Down 32% Since Last Year, Refi Demand Down 44% YoY

Resident Biden has been an unmitigated disaster for the US middle class, but fantastic for BIG corporate America and the donor class.

Mortgage applications increased 6.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 5, 2023.

The Market Composite Index, a measure of mortgage loan application volume, increased 6.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 7 percent compared with the previous week. The Refinance Index increased 10 percent from the previous week and was 44 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index increased 5.3 percent compared with the previous week and was 32 percent lower than the same week one year ago.

Here is the data.

Middle class Joe as he likes to call himself is actually BIG CORPORATE Joe. A friend of big donor and BIG pharmam, BIG banks, BIG tech, BIG defense contractors, BIG media. No wonder Hunter Biden refers to Joe as “The BIG guy!”

Apocalypse Now? Statist Paul Krugman Says There’s No Real Risk To The Dollar Unless The US Defaults On Its Debt ($187 TRILLION In Unfunded Liabilites That Keep Growing Requiring MORE Debt)

The Federal government in Washington DC is broken beyond repair. Politicians get elected by promising free or cheap things, so they keep delivering the bacon. Or pork to political donors. The top 1% get massive payoffs (like green energy subsidies or bank bailouts), the bottom 99% get out of control entitlements like Social Security, Medicare and Medicaid. And other unsustainable entitlements. In fact, student loans are now an entitlement since some voters will vote for the corrupt politician (no, Joe Biden isn’t the only corrupt politician in Washington DC) who will forgive their student loans.

In fact, we now have $187 TRILLION in UNFUNDED liabilities that were promised to the 99%. The 1% will always get their political contributions paid. Biden and Schumer have promised their donor class trillions in spending, so that are threatening to let the US debt default to protect the 1%.

And unfunded entitlements are expected to soar, particularly Medicare.

Mandatory spending is expected to soar while discretionary spending is almost flat in terms of growth.

Meanwile, the US credit default swap remains elevated as the US Treasury short curve (2Y-3M) is near the most inverted in history.

And this headline, “Biden Not Ready Yet to Invoke 14th Amendment to Avoid US Default”. That means Biden would adopt extraordinary powers to prevent a debt default. Hence, the idiocy like the trillion dollar coin.

Nobel Laureate and Statist useful idiot Paul Krugman wants to keep spending trillions. As a result, he argues “Don’t worry about the declining US dollar hegemony … as long as the US doesn’t default.” Translation: Krugman agrees with Dementia Joe that Republicans should just pass Biden’s budget with no strings attached. C’mon Krugman. The growth of BRICs (Brazil, Russia, India, South Africa and growing) is partly due to 1) perceived weakness of Senile Grandpa Joe and 2) the fiscal spending and debt growth in Washington DC. Of course it matters, but Krugman wants to keep spending on green lunacy and entitlements until we break the back of the country. Sounds like Krugman is on board with Cloward-Piven.

They can’t cut promised entitlements. Look at France where Macron raised the retirement age by 2 years and there are endless riots. So debt default is the only option, though painful.

Will Congress and future administrations stop prominsing endless spending that benefits the 1%? Not likely. Our political system is hopelessly broken.

I am sure that China’s Communist Party has sent Dementia Joe a message “We own you! You better not default on what you owe us!!” Or default so we can own you financially.

Three of the four horsemen of the financial apocalypse. Yellen is the fourth horseman, but is too short to appear in the picture.

US Credit Default Swap Price 1Y Remains Elevated As Clueless Joe Defies Republican Budget Cuts, US Treasury 2Y-3M Yield Curve Inverts To Lowest In History

Ok, it is well-known that Biden was the stupidest man in the US Senate. And with Washington’s Patty Murray in the Senate, that is quite an accomplishment.

But Biden is President and is still stupid and spiraling down the dementia rabbit hole. He is blaming Republicans for their budget proposal to end the debt ceiling crisis despite saying previously that he would negotitate. Apparently, Biden’s puppet masters are telling him to risk default by playing the blame game.

So, US credit default swap (CDS 1Y, SR, EURO) price remains elevated which indicates that Biden, Yellen and Schumer may actually default on US debt.

As M2 Money growth crashes and burns, the US Treasury 2Y-3M yield curve inverts to lowest in history.