This podcast episode explores the dynamics of Treasury auctions, focusing on the interplay between supply and demand. It discusses the bid-to-cover ratio and the tail as key metrics to assess the quality of an auction. The role of primary dealers in Treasury auctions is discussed, along with the recent increase in long-dated Treasury rates and its relation to supply and demand. The impact of supply and demand on interest rates is analyzed, with a focus on the role of the Fed's trajectory. The reduced political concern about US government debt despite elevated levels is also addressed, along with the lack of fiscal discussion in the 2020 US presidential election. The current state of US debt financing and market outlook is examined, along with the potential risks associated with the fiscal trajectory of the United States.
