The fiscal problems in the U.S. are now reported to be keeping President Obama awake at night. Rising interest burdens are expected to raise the current deficit to over $2 trillion in fiscal 2009.
This will be a crucial week for Treasury securities. The Treasury Department will auction a record $104 billion worth of new debt, consisting of $40 billion in 2-year notes on Tuesday, $37 billion 5-year notes on Wednesday and $27 billion in 7-year notes on Thursday.
All eyes will be on the Fed to see if they will continue monetizing the Treasury debt, especially now that China is no longer actively participating in Treasury auctions.