There are major Treasury auctions this week. The yields on rose on Tuesday, but the auction on Wednesday appeared to go better, since yields meandered lower. Due to a $39 trillion deficit, the Trump Administration has to make the U.S. an attractive destination for capital in the world.
Frankly, due to higher yields in the U.S. than in most of Asia and Europe, the should continue to strengthen and attract capital. In the meantime, Treasury Secretary Scott Bessent is doing a great job keeping the bond vigilantes away for the time being.
California is now increasingly dependent on imported gasoline from India and South Korea due to ongoing refinery shutdowns. In fact, $8 per gallon gasoline in California is now possible due to the Valero refinery in Benicia, California, shutting down in April, plus the seasonal switch to more expensive summer fuel blends. So ironically, California is becoming more dependent on from the Middle East.
The Labor Department on Wednesday reported that surged 1.3% in February, which is the highest level in four years and well above economists’ consensus estimate of 0.6%. The price of imported petroleum products rose 2.5% in February, while non-petroleum imports rose 1.2%. This surge in import prices is expected to continue to soar in March, so an inflation “bubble” will be boosting prices in the upcoming months, and hopefully this bubble will “pop” in the fall, which will allow the Fed to continue to cut key interest rates.
Since the five-day pause in hostilities expires after Friday, some traders will likely clean out their inventories on Friday. According to CNN, Vice President J.D. Vance may be traveling to Pakistan to facilitate the negotiations with Iran. The Wall Street Journal reported that Iran’s Parliament speaker, Mohammad-Bagher Ghalibaf, and the mayor of Tehran may be the person the Trump Administration is negotiating with. President Trump is very upbeat about negotiating a successful ceasefire with Iran.