I Read the Financial News Today

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September 16, 2026:  A Day in the Life of a Retired Finance Professor

The Fed raises the Fed funds rate for the first time since 2023. This will raise most short-term interest rates, in response to a rising inflation rate. President Trump is not pleased.

European countries are pulling central bank gold out of the Fed’s gold vault in New York. Gold is slowly replacing the dollar as a central bank reserve asset. (Personal note:  Many years ago I was in a small group given a tour of the NY Fed that included going into the Fed's gold vault. As we entered, the guide said "Don't even think about it.")

Many countries are exploring and implementing ways not to use the dollar in international transactions. One method is to use central bank digital currencies to settle international trade payments instead of the dollar.

Scott Bessent, the U.S. Secretary of the Treasury, announces a government buy-back of a small amount of U.S. 10-year Treasuries ($4-$6 billion) to lower long-term interest rates. (This is silly. The national debt is 10,000 times the lower figure.)

The global spot price of crude oil hits $108 a barrel.

The 30-year fixed mortgage rate is rising near to 7%. (Old fogey personal comment:  Coincidentally, I sold my house this week. The buyers' yearly mortgage payment is greater than the total cost of the first house I bought many, many years ago.)

The interest rate on U.S. 10-year Treasury bonds goes over 5%, the first time since 2007.

Norway’s sovereign wealth fund, the largest in the world, is reducing its holdings of U.S. Treasuries even though the rates are going up.

Scott Bessent supports President Trump’s plan to give every adult in America $5,000 if the Republican Party wins the November congressional elections. Total cost could be as high as $1.25 trillion. This would add about $50 billion a year to the government’s interest expense and would increase next fiscal year's annual budget deficit by over 1/3. (Comment:  Scott Bessent has become very, very rich betting against governments doing stupid things like this.)

                  In the background I hear the music from Money for Nothing by Dire Straits.


For a comprehensive overview of government finance, see


Government Finance 101. Fiscal Policy;  Welcome to Alice in Wonderland

 

 

 

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