Sizing Up US Debt

I. Adding It Up

The bond market had a good day today: It was closed for Columbus Day. We think that yields have risen high enough to attract buyers. If so, then yields should stabilize around current levels. Plenty could still go wrong, making bond yields even more attractive. The war in the Middle East is likely to heat up again after the midterm elections, sending oil prices higher. On the other hand, this week's core CPI is likely to rise just 0.2%, which would likely postpone a Fed rate hike from later this month to early December.