Amid the escalating debt ceiling standoff which is sure to culminate with fireworks some time in September, the Treasury announced on Wednesday morning that it would offer $96 billion of Treasury securities to refund approximately $67.1 billion of privately-held Treasury notes and bonds maturing on February 15, 2023. The amount was inline with expectations and was unchanged from last month. This issuance will raise new cash from private investors of approximately $28.9 billion. Issuance plans for Treasury Inflation-Protected Securities, or TIPS, were also kept unchanged compared with sizes over the prior quarter. The securities to be issued are:
3-year note in the amount of $40 billion, to be sold on Feb 7 and maturing February 15, 2026;
10-year note in the amount of $35 billion, to be sold on Feb 8 and maturing February 15, 2033
30-year bond in the amount of $21 billion, to be sold on Feb 9 and maturing February 15, 2053.
Explaining the unchanged auction size, the Treasury said it "believes that current issuance sizes leave it well-positioned to address a range of potential borrowing needs, and as such, does not anticipate making any changes to nominal coupon and FRN new issue or reopening auction sizes over the upcoming February 2023 – April 2023 quarter."
The balance of Treasury financing requirements over the quarter will be met with regular weekly bill auctions, cash management bills (CMBs), and monthly note, bond, Treasury Inflation-Protected Securities (TIPS), and 2-year Floating Rate Note (FRN) auctions.
While there were no surprises in the refunding amounts, the elephant in the room, of course, is that the department is now operating under the constraints of the $31.4 trillion debt ceiling, having hit the level last month and begun using special accounting maneuvers to help preserve borrowing room.
Last month, Janet Yellen outlined in letters to Congress, that the period of time that extraordinary measures may last is subject to considerable uncertainty due to a variety of factors, including the challenges of forecasting the payments and receipts of the U.S. government months into the future. While Treasury is not currently able to provide an estimate of how long extraordinary measures will enable us to continue to pay the government’s obligations, it is unlikely that cash and extraordinary measures will be exhausted before early June.
“Until the debt limit is suspended or increased, debt limit-related constraints will lead to greater-than-normal variability” in the issuance of bills, as well as significant usage of CMBs the department advised. Dealers have pointed to the importance of tax receipts in coming months as a key variable for the Treasury’s borrowing needs.
Separately, as Bloomberg notes, at some point the Federal Reserve’s continuing QT - or active shrinkage of its portfolio of Treasuries - is expected to force the Treasury to boost issuance of coupons. That’s after the department steadily scaled back sales from November 2021 through last August, as pandemic-relief spending was phased out.
“Eventually, coupon auctions should start to rise again, but we doubt that this will occur until after the debt ceiling is increased or suspended,” Wells Fargo economists Michael Pugliese and Angelo Manolatos wrote in a note before Wednesday’s release. The bank currently sees auctions rising starting with the November refunding. Furthermore, as noted earlier this week and previously, the Treasury will instead drain its cash holdings at an accelerated pace as it struggles to keep the government working without a debt ceiling deal.
The Treasury on Monday estimated its cash balance at $500 billion for the end of March, slightly below where it is now, but caveated that this number assumes a debt deal is in place, which is not the case, and is also why the cash level will be drained much faster than the TSY forecasts. It also lifted its projections for federal borrowing for the current quarter to $932 billion.
Separately, Bloomberg noted that T-bills are currently hovering near the bottom of the recommended 15% to 20% share of total debt, as specified by the TBAC (aka the shadow group that runs the world).
Also on Wednesday, the Treasury highlighted that it’s continuing to examine the idea of launching a buyback program, something that, in October, it asked dealers their views on when illiquidity in the Treasury market prompted some to evaluate Treasury or Fed intervention to unfreeze the bond market (since then a surge in foreign demand has helped alleviate much of the lack of liquidity).
Buying back less-traded securities and selling more of the current benchmarks could be one way to address continuing concerns about illiquidity in the Treasuries market. TBAC in a statement Wednesday said the Treasury “should consider buybacks to provide liquidity support to the overall Treasury market and to achieve cash management goals.” “Treasury expects to share its findings on buybacks as part of future quarterly refundings,” the department said.
Treasury continues to study a potential buyback program. Over the last quarter, Treasury has conducted further outreach with a broad variety of market participants in order to assess the costs and benefits associated with several potential uses for buybacks, including liquidity support and cash and maturity management. In addition, the Treasury Borrowing Advisory Committee provided additional analysis on buybacks at yesterday’s meeting. Treasury expects to share its findings on buybacks as part of future quarterly refundings. Treasury has not made any decision on whether or how to implement a buyback program but will provide ample notice to the public on any decisions.
Some more details from the TBAC Executive Summary on the TSY buyback charge:
Committee presented on considerations for designing a “regular and predictable” Treasury buyback program.
Presenting member proposed a series of guiding principles, noting they should be used “mainly for liquidity support and cash management purposes, but are not intended to mitigate episodes of acute market stress.” Here is the full list:
Operate within the “regular and predictable" framework to minimize negative externalities.
Main purposes are liquidity support and cash management.
Maintain neutrality to the maturity structure of marketable debt outstanding
Be accretive to the taxpayer, through direct or indirect benefits
Do no harm: mitigate uncertainties by approaching gradually and analyzing carefully.
Treasury buybacks are intended to support healthy market functioning but not mitigate episodes of acute stress in markets
The TBAC recommended that if the Treasury moves forward with a buyback program that it start small and “expand cautiously”
“Additionally, any program should be undertaken deliberately and dynamically with frequent monitoring of the impact to ensure Treasury’s objectives are being met,” they wrote adding that the Treasury should also “carefully consider” many issues before deciding to move forward. Those include:
Short-end buybacks could provide a beneficial cash-management tool to be used on an “as-needed basis”
Whether a buyback program could provide direct liquidity to specific securities and sectors, but the ultimate benefit should be enhanced overall market functioning
Program should be at least large enough to have some “observable impact on liquidity conditions or cash management” yet shouldn’t be so large as to overwhelm new issue demand and “materially erode the on-the-run liquidity premium”
Treasury could monitor several quantitative and qualitative measures to assess the impact of a potential buyback program, including bid/offer spreads, auction tails, trading volumes and dispersion of off-the-run spreads
The presentation then reviewed potential use cases, discussed a framework to size buyback operations, and ended with several considerations for structuring a buyback program.
Presenting member concluded Treasury buybacks “should result in both direct and indirect benefits for the taxpayer, with the indirect benefits potentially outweighing the direct benefits”
Another presenting member emphasized designing and executing a buyback program would be “highly complex and would require Treasury to conduct additional analysis”
Committee noted Treasury could announce buyback amounts within the context of quarterly refundings, but there was debate about the importance for the department to retain flexibility regarding operations, such as times when the market didn’t require liquidity support.
Members generally agreed flexibility could be achieved in a manner consistent with Treasury’s regular and predictable issuance framework
Regarding financing for upcoming quarters, TBAC recommended Treasury maintain nominal coupon auction sizes at current levels and noted “there is ample scope to increase bill supply”
TBAC noted in the future it may be appropriate to consider increases to nominal coupon auction sizes in order to maintain T-bills’ share of total debt within the committee’s recommended range of 15%-20%; it also said it was important to monitor how borrowing needs would evolve, given significant uncertainty related to the economic outlook and SOMA redemptions
TBAC also discussed capacity to increase TIPS issuance and recommended “modest” increases focused in the 5-year tenor to support their share as a percentage of total debt outstanding
The conclusion to the buyback discussion:
And the full presentation is below (pdf link).
Our Society Is Melting Down Even Faster Than Most People Thought That It Would
Our Society Is Melting Down Even Faster Than Most People Thought That It Would
Authored by Michael Snyder via The End of The American Dream…
It can be difficult to believe that the wild scenes that we are witnessing on the streets of America are actually real. Earlier this week, I wrote an article entitled “What Life Is Really Like In America’s Hellish Inner Cities”. I wrote that article before the widespread looting that just erupted in Philadelphia. Just when I think that conditions in our core urban areas have reached a low point, they seem to find a way to get even worse. Unfortunately, this is just the beginning of this crisis. As economic conditions continue to deteriorate, countless numbers of people will become very desperate. And when countless numbers of people become very desperate, our society will descend into a permanent state of chaos.
On Tuesday night, dozens of young people went on a rampage in the city of Philadelphia.
It is being reported that “stores in several areas of Philadelphia” were hit…
Dozens of people faced criminal charges Wednesday after a night of social media-fueled mayhem in which groups of thieves, apparently working together, smashed their way into stores in several areas of Philadelphia, stuffing plastic bags with merchandise and fleeing, authorities said.
A total of 52 arrests have been made so far, police said Wednesday.
Burglary, theft and other counts have been filed so far against at least 30 people, all but three of them adults, according to Jane Roh, spokesperson for the Philadelphia district attorney’s office.
The largest group consisted of approximately 100 young people, and there was violence when the police finally confronted that group outside of a Lululemon store…
Police in the city said that a large group of around 100 juveniles kept moving from store to store and looting them.
Videos shared on social media show officers attempting to grab thieves, some of whom are wearing Halloween masks, as they run riot through a Lululemon store.
One officer manages to hit one of the looters with a punch after tackling them to the ground.
Many on social media seem to be quite entertained by videos of the looting, but the truth is that this footage should break all of our hearts.
Everything in Center City Philadelphia is free with promo code: “the Big Guy 2024.”— Charles R Downs (@TheCharlesDowns) September 27, 2023
"Everybody keep yo phone out!"— Andy Ngô ????️???? (@MrAndyNgo) September 27, 2023
Seeking another George Floyd moment, #BLM protesters tell one another to start recording after Philadelphia Police arrived to make arrests at the downtown mass looting. Video uploaded by @OSiiNT:pic.twitter.com/oEyKU3Mhwk
Our society is literally coming apart at the seams all around us.
I had warned my readers that total retail theft would exceed 100 billion dollars this year, but now it is being reported that total retail theft already broke that threshold in 2022…
Last year, total losses tied to theft amounted to $112.1 billion, according to data from the 2023 National Retail Security Survey. That is up from $93.9 billion in losses in 2021 and $90.8 billion in 2020.
Retailers within metros including Los Angeles, San Francisco and Oakland as well as Houston, New York and Seattle were hit the hardest last year.
So if last year’s number was 112 billion, what will the final number be for 2023?
Major retail chains all over America are shutting down stores due to rampant theft.
Target Corp. will shutter nine stores across four states on Oct. 21 because of theft and threats to safety, the company announced Tuesday, the latest — and loudest —example of a retailer exiting urban locations because of crime.
Target said it made the “difficult decision” to close the stores — which include locations in the Harlem neighborhood of New York City, Seattle, Portland and the San Francisco Bay area — after the Minneapolis-based company determined that theft-preventive measures had proved ineffective. The company said it had tried adding more security, including third-party guards, and using deterrents such as locking up merchandise.
“We cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests and contributing to unsustainable business performance,” the company said.
But nine stores is just a drop in the bucket compared to what other retailers are doing.
For example, it is being reported that Rite Aid will close approximately 500 stores…
One of the largest U.S. drugstores chains Rite Aid is set to close around 500 stores nationwide as it negotiates a plan to file for Chapter 11 bankruptcy.
The Wall Street Journal reported that the firm, which is the third largest in the country, is looking to close branches and either sell or let creditors take over their remaining operations.
And CVS is in the process of closing a total of 900 stores by 2024…
Drugstore chain CVS is set to close hundreds of stores across the US as it undergoes a major reform to adjust to the needs of modern online shoppers.
The retail giant is coming to the end of a policy launched in 2021 which will see 300 stores closed each year – meaning 900 will have shuttered by 2024.
In the announcement, which has hit headlines again recently amid rampant shoplifting at the store, bosses they said that they were undergoing a new ‘retail footprint strategy.’
Drugstores used to be all over the place in our core urban areas.
But now our inner cities are littered with scores of boarded up establishments with “space available” signs on them.
This is what the future of America looks like, and it isn’t good.
Once upon a time, we could be proud of the shiny new cities that we had built from coast to coast.
Those cities were safe and they were clean.
But now our major cities have degenerated into crime-ridden hellholes that are absolutely filthy. In New York City, the millions of rats that live there are constantly making headlines…
This is the moment a group of horrified New Yorkers is forced to hop over scores of vermin scurrying across their path from bins outside a pizzeria.
Footage shows a few rats brazenly scurry across the pavement before scores of them emerge from an overflowing bin.
Taryn Brady, 29, who was with a group of friends when she filmed the rat encounter, said she was left in ‘fear and disgust’ after she and her friends had to hop over the rodents running towards them.
This is our country now.
I know that I keep saying that, but it is such an important point.
We don’t have the same nation that previous generations passed down to us.
Over the past 50 to 60 years, we have literally ruined America.
From the White House all the way down to the kids that are looting retailers in our major cities, we have become a laughingstock to the rest of the world.
And if we don’t find a way to turn things around, our story is going to have an absolutely tragic ending.
* * *
Fauci And The CIA: A New Explanation Emerges
Fauci And The CIA: A New Explanation Emerges
Authored by Jeffrey A. Tucker via Brownstone Institute,
Jeremy Farrar’s book from August 2021…
Jeremy Farrar’s book from August 2021 is relatively more candid than most accounts of the initial decision to lock down in the US and UK. “It’s hard to come off nocturnal calls about the possibility of a lab leak and go back to bed,” he wrote of the clandestine phone calls he was getting from January 27-31, 2020. They had already alerted the FBI and MI5.
“I’d never had trouble sleeping before, something that comes from spending a career working as a doctor in critical care and medicine. But the situation with this new virus and the dark question marks over its origins felt emotionally overwhelming. None of us knew what was going to happen but things had already escalated into an international emergency. On top of that, just a few of us – Eddie [Holmes], Kristian [Anderson], Tony [Fauci] and I – were now privy to sensitive information that, if proved to be true, might set off a whole series of events that would be far bigger than any of us. It felt as if a storm was gathering, of forces beyond anything I had experienced and over which none of us had any control.”
At that point in the trajectory of events, intelligence services on both sides of the Atlantic had been put on notice. Anthony Fauci also received confirmation that money from the National Institutes of Health had been channeled to the offending lab in Wuhan, which meant that his career was on the line. Working at a furious pace, the famed “Proximal Origin” paper was produced in record time. It concluded that there was no lab leak.
In a remarkable series of revelations this week, we’ve learned that the CIA was involved in trying to make payments to those authors (thank you whistleblower), plus it appears that Fauci made visits to the CIA’s headquarters, most likely around the same time.
Suddenly we get some possible clarity in what has otherwise been a very blurry picture. The anomaly that has heretofore cried out for explanation is how it is that Fauci changed his mind so dramatically and precisely on the merit of lockdowns for the virus. One day he was counseling calm because this was flu-like, and the next day he was drumming up awareness of the coming lockdown. That day was February 27, 2020, the same day that the New York Times joined with alarmist propaganda from its lead virus reporter Donald G. McNeil.
On February 26, Fauci was writing: “Do not let the fear of the unknown… distort your evaluation of the risk of the pandemic to you relative to the risks that you face every day… do not yield to unreasonable fear.”
The next day, February 27, Fauci wrote actress Morgan Fairchild – likely the most high-profile influencer he knew from the firmament – that “be prepared to mitigate an outbreak in this country by measures that include social distancing, teleworking, temporary closure of schools, etc.”
To be sure, twenty-plus days had passed between the time Fauci alerted intelligence and when he decided to become the voice for lockdowns. We don’t know the exact date of the meetings with the CIA. But generally until now, most of February 2020 has been a blur in terms of the timeline. Something was going on but we hadn’t known just what.
Let’s distinguish between a proximate and distal cause of the lockdowns.
The proximate cause is the fear of a lab leak and an aping of the Wuhan strategy of keeping everyone in their homes to stop the spread. They might have believed this would work, based on the legend of how SARS-1 was controlled. The CIA had dealings with Wuhan and so did Fauci. They both had an interest in denying the lab leak and stopping the spread. The WHO gave them cover.
The distal reasons are more complicated. What stands out here is the possibility of a quid pro quo. The CIA pays scientists to say there was no lab leak and otherwise instructs its kept media sources (New York Times) to call the lab leak a conspiracy theory of the far right. Every measure would be deployed to keep Fauci off the hot seat for his funding of the Wuhan lab. But this cooperation would need to come at a price. Fauci would need to participate in a real-life version of the germ games (Event 201 and Crimson Contagion).
It would be the biggest role of Fauci’s long career. He would need to throw out his principles and medical knowledge of, for example, natural immunity and standard epidemiology concerning the spread of viruses and mitigation strategies. The old pandemic playbook would need to be shredded in favor of lockdown theory as invented in 2005 and then tried in Wuhan. The WHO could be relied upon to say that this strategy worked.
Fauci would need to be on TV daily to somehow persuade Americans to give up their precious rights and liberties. This would need to go on for a long time, maybe all the way to the election, however implausible this sounds. He would need to push the vaccine for which he had already made a deal with Moderna in late January.
Above all else, he would need to convince Trump to go along. That was the hardest part. They considered Trump’s weaknesses. He was a germaphobe so that’s good. He hated Chinese imports so it was merely a matter of describing the virus this way. But he also has a well-known weakness for deferring to highly competent and articulate professional women. That’s where the highly reliable Deborah Birx comes in: Fauci would be her wingman to convince Trump to green-light the lockdowns.
What does the CIA get out of this? The vast intelligence community would have to be put in charge of the pandemic response as the rule maker, the lead agency. Its outposts such as CISA would handle labor-related issues and use its contacts in social media to curate the public mind. This would allow the intelligence community finally to crack down on information flows that had begun 20 years earlier that they had heretofore failed to manage.
The CIA would hobble and hamstring the US president, whom they hated. And importantly, there was his China problem. He had wrecked relations through his tariff wars. So far as they were concerned, this was treason because he did it all on his own. This man was completely out of control. He needed to be put in his place. To convince the president to destroy the US economy with his own hand would be the ultimate coup de grace for the CIA.
A lockdown would restart trade with China. It did in fact achieve that.
How would Fauci and the CIA convince Trump to lock down and restart trade with China? By exploiting these weaknesses and others too: his vulnerability to flattery, his desire for presidential aggrandizement, and his longing for Xi-like powers over all to turn off and then turn on a whole country. Then they would push Trump to buy the much-needed personal protective equipment from China.
They finally got their way: somewhere between March 10 or possibly as late as March 14, Trump gave the go ahead. The press conference of March 16, especially those magical 70 seconds in which Fauci read the words mandating lockdowns because Birx turned out to be too squeamish, was the great turning point. A few days later, Trump was on the phone with Xi asking for equipment.
In addition, such a lockdown would greatly please the digital tech industry, which would experience a huge boost in demand, plus large corporations like Amazon and WalMart, which would stay open as their competitors were closed. Finally, it would be a massive subsidy to pharma and especially the mRNA platform technology itself, which would enjoy the credit for ending the pandemic.
If this whole scenario is true, it means that all along Fauci was merely playing a role, a front man for much deeper interests and priorities in the CIA-led intelligence community. This broad outline makes sense of why Fauci changed his mind on lockdowns, including the timing of the change. There are still many more details to know, but these new fragments of new information take our understanding in a new and more coherent direction.
Jeffrey A. Tucker is Founder and President of the Brownstone Institute. He is also Senior Economics Columnist for Epoch Times, author of 10 books, including Liberty or Lockdown, and thousands of articles in the scholarly and popular press. He speaks widely on topics of economics, technology, social philosophy, and culture.
North Korea Enshrines “Permanent” Nuclear Power Status In Constitution
North Korea Enshrines "Permanent" Nuclear Power Status In Constitution
On Thursday North Korean state media quoted leader Kim Jong Un as saying…
On Thursday North Korean state media quoted leader Kim Jong Un as saying more advanced atomic weapons are needed to counter the threat from the United States.
This signals the death knell for Washington's long stated policy goal of denuclearization of the Korean peninsula, given that the remarks came as Kim enshrined the DPRK's status as a permanent nuclear power in its constitution.
North Korea's "nuclear force-building policy has been made permanent as the basic law of the state, which no one is allowed to flout," Kim told the State People's Assembly, according to state-run KCNA.
Starting last year he declared the north as an "irreversible" nuclear weapons state, and has in the last couple months ramped up ballistic missile tests in response to intermittent, ongoing joint US military drills with the south. This has already been a record year in terms of the number of Pyongyang's missile tests.
The north's rubber-stamp parliament, which met Tuesday and Wednesday, has approved the nuclear update to the constitution. Kim described that this was necessary as the United States has "maximized its nuclear war threats to our Republic by resuming the large-scale nuclear war joint drills with clear aggressive nature and putting the deployment of its strategic nuclear assets near the Korean peninsula on a permanent basis."
In July, the nuclear-armed USS Kentucky Navy ballistic missile submarine made a port call in South Korea, which marked a first in decades. It has stayed there since, enraging Pyongyang.
Kim in his Thursday address also blasted growing defense cooperation between Washington, Seoul and Tokyo as the "worst actual threat," saying that as a result "it is very important for the DPRK to accelerate the modernization of nuclear weapons in order to hold the definite edge of strategic deterrence."
A similar message was delivered in New York on Tuesday by Kim Song, North Korea's representative at the UN, who said in an address to the UN General Assembly that the region is close to the "brink of a nuclear war".
NEW: North Korea’s ambassador to the U.N. issued a stark warning that the Korean Peninsula has reached a “hair-trigger situation with imminent danger of nuclear war breakout,” delivering a speech at the 78th U.N. General Assembly in New York on Tuesday. https://t.co/Rwtxf37wkW— NK NEWS (@nknewsorg) September 27, 2023
"Owing to the reckless and continued hysteria of nuclear showdown on the part of the US and its following forces, the year 2023 has been recorded as an extremely dangerous year that the military security situation in and around the Korean peninsula was driven closer to the brink of a nuclear war," he said.
"Due to [Seoul’s] sycophantic and humiliating policy of depending on outside forces, the Korean peninsula is in a hair-trigger situation with imminent danger of nuclear war," the ambassador continued. He further blasted the US for attempting to erect an "Asian NATO" that will bring a "new Cold War structure to northeast Asia."
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