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Michael Schumacher’s chief concern right now: Who’s going to buy all those extra Treasury notes?
“They [people] are worried about Treasury issuance going up, up, up. You could see an increase in 2018 of 50 percent — maybe more versus last year. That’s got a lot of people very concerned, myself included,” he said recently on CNBC’s “Futures Now.”
He anticipates the Treasury Department will likely announce within days a “pretty significant change” in the way it issues bonds. It comes just as the Fed is shrinking its balance sheet. With less demand coming from the Fed, a fire sale of sorts would increase supply and emerge as the major catalyst causing yields to jump.
His latest forecast comes just days before Janet Yellen begins her final two-day Federal Reserve meeting as chair this week. Her term ends Saturday. Jerome Powell, who’s expected to resume Yellen’s interest rate hike policy, will be replace her.”
https://www.cnbc.com/2018/01/26/treasury-market-fire-sale-could-hurt-bonds-wells-fargo-warns.html