Lower interest rates great for U.S. federal government balance sheet

BTW, lower interest rates are a really good deal for the balance sheet of the U.S. federal government. The U.S. Treasury just auctioned 3-month T-bills this morning for 2.424% and even 6-month T-bills fetched only 2.47%. That really sucks if you are buying T-bills, but is really great for the U.S. Treasury and taxpayers since it effectively allows Uncle Sam to refinance its short-term debt at a significantly lower rate. This means that the interest portion of the U.S. federal government budget will shrink a bit.

It also means that financing of new issues for longer-term U.S. Treasury debt (2-year, 5-year, 10-year, 30-year) will be at cheaper interest rates as well. That of course will also suck if you are a buyer of Treasury notes and bonds, but will be great for the U.S. federal government budget since interest payments will become smaller as debt is incremnetally rolled over as it matures (e.g., 10-year notes issued 10 years ago.)

Finally, it means that the upcoming fiscal stimulus will be financed at really cheap rates.

Nice to see that there are some silver linings in all those dark clouds.

-- Jack Krupansky