Gold 
Palladium 
“The prospect of increased borrowing by a second Trump administration has spooked bond investors in recent months. One major concern: how the government will execute that borrowing.
At issue is a strategy pursued by the Treasury Department since late 2023 to lean more on short-term Treasurys to fund the government. Many on Wall Street credit that approach with calming markets buffeted by sticky inflation and a swollen federal budget deficit.
Key members of the Trump administration, however, have expressed hostility to the strategy, characterizing it as a risky effort to juice the economy. Those include freshly confirmed Treasury Secretary Scott Bessent and Stephen Miran, the president’s choice to chair his Council of Economic Advisers.
Investors have generally welcomed Bessent’s appointment, seeing the former hedge-fund manager as a potential moderating influence on President Trump on issues such as deficit spending and tariffs.
Still, some worry that he might ramp up issuance of longer-term debt, or “duration” in Wall Street parlance, putting upward pressure on already elevated U.S. Treasury yields—a key benchmark for borrowing costs throughout the economy. That has raised the stakes for Wednesday’s release of the Treasury’s quarterly borrowing plans.
“If they’re legitimately of that view—that Treasury should have been adhering to a policy of issuing more duration and less bills—then that could be a big deal for yields,” said Blake Gwinn, head of U.S. rates strategy at RBC Capital Markets.
Investors care about the federal deficit because filling a larger budget shortfall requires selling more Treasurys. That can drive down the prices of existing bonds, pushing yields higher.
Details matter, however. Borrowing in T-bills—debt that matures in a year or less—typically has little impact on the 10-year Treasury yield, which is what moves things like mortgage rates.
Investors don’t expect the Treasury to change the size of its note and bond auctions this week. The agency typically telegraphs such adjustments well in advance and said in October that it didn’t expect changes to longer-term debt auctions “for at least the next several quarters.”
10-year U.S. Treasury yieldSources: Ryan ALM, Tradeweb FTSE closesNote: Shows month-end values
Investors instead will be checking for changes to that guidance—in particular, whether Treasury at least opens the door to increases in the second half of the year.
Many analysts have been anticipating such a move, even before the change in administration, given the government’s projected borrowing needs. The Congressional Budget Office recently forecast a fiscal 2025 budget deficit of nearly $1.9 trillion.
Absent increases in longer-term debt issuance, Treasury would need to rely more on T-bills to meet its funding requirements.”
*This information is solely an excerpt of a third-party publication and is incomplete. Please subscribe to the referenced publication for the full article. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
