February 26, 2018

Weekly Market Commentary
February 26, 2018

The Markets

U.S. Treasuries are offering a lesson in supply and demand. Here is a short course on how this works if you are interested.

Last week, the U.S. Treasury auctioned $258 billion in bonds. Treasury auctions are the way the United States government finances its debt. The Treasury sells short-, intermediate-, and long-term IOUs, known as bills, notes, and bonds. When investors and governments purchase bonds, they agree to lend money to the United States. In return, the United States agrees to pay an amount of interest over a certain period of time. At the end of that time, the government is expected to repay the money borrowed.

The price and interest paid on U.S. government debt is determined by supply and demand. When there are few bonds and a lot of demand, prices rise and interest rates fall. When there are a lot of bonds and little demand, prices fall and interest rates rise.

The Treasury increased its debt issuance to fund tax reform and the two-year federal budget. Reuters reported, “…tax reform is expected to add as much as $1.5 trillion to the federal debt load, while the budget agreement would increase government spending by almost $300 billion over the next two years.” Imagine if we ran our households with this approach!

Higher interest rates are being forecast so we will be watching as it develops or not.

OLYMPIC ATHLETES HAVE TO PAY THE BILLS, TOO. Not every American Olympian and Paralympian is a household name. Money.com reported, “These athletes don’t have the same kind of lucrative sponsorship deals as Olympic standouts like snowboarder Shaun White or alpine skiing star Lindsey Vonn – so they have to make ends meet, which can often mean squeezing in extra shifts during the off season, heading to the gym early in the morning before work and moving from a full-time position to a part-time one with no replacement for those lost wages.”

So, how do lesser-known athletes pay the bills while training?

• Sled hockey player Josh Pauls is a sales account executive. His teammate Steve Cash is a personal banker.
• Pairs figure skater Chris Knierim works as an auto mechanic and wants to have his own auto shop someday.
• Biathlon competitor Lowell Bailey is a singer and songwriter who plays in bluegrass bands.
• Curling team member Nina Roth is a registered nurse. Her teammate Tabitha Peterson is a pharmacist.
• Snowboarder Jonathan Cheever is a licensed plumber.
• Luger Emily Sweeney is a member of the National Guard, and so is bobsledder Nick Cunningham.
• Short track speed skater Jessica Kooreman has a real estate license.
• Luger Justin Krewson is a firefighter.
• Snowboarder Mike Schultz designs and engineers prosthetics.
• Nordic skier Kendall Gretsch works in tech support.

There is a lot to admire about Olympic and Paralympic athletes.

Focus On The Positive

“If you’re riding ahead of the herd, take a look back every now and then to make sure it’s still there.”–Will Rogers

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