The risk of fantastic savings

21 Feb 2025 2 min read

Daily update

US Treasury Secretary Bessent signaled that former US Treasury Secretary Yellen鈥檚 debt issuance plan would continue, implying no increase in longer-dated Treasury bonds and lowering 10-year yields. This support is threatened by talk of a 鈥淒OGE dividend鈥� to taxpayers. There is a considerable gulf between claimed government savings and economists鈥� view of reality. Refunding illusionary savings would be a deficit-financed stimulus check.
UK January retail sales were stronger than expected, led by food sales (online retail also grew). Perhaps retailers鈥� reported pessimism is driven by something other than economic reality. As is typical at the start of the year, the government had a budget surplus in January.
German elections are due Sunday, though forming a government and setting policy (which is what investors care about) will take time. The performance of the far-right AfD will be a focus. Prejudice politics and economic nationalism are global themes that need monitoring, as they potentially undermine economic efficiency.
Final February US Michigan consumer sentiment data is mainly of use as a source of entertainment, such is the degree of political partisanship. However, approval for US President Trump鈥檚 economic policies and Trump mega-donor Musk has been falling, and the Michigan sentiment may hint at whether that disapproval is partisan or not.