The only news that matters today and the rest of this week are the deficit reduction and debt ceiling negotiations. I do find it interesting that news outlets focus on raising the debt ceiling as the only alternative. Ron Paul has a rather interesting, common sense solution. The largest holder of U.S. Treasury debt, approximately $1.6 trillion, is the Federal Reserve. So in effect the government is borrowing from itself, and we are paying interest to ourselves. Why not have the Fed cancel the debt?
Well, we know that will not happen, so until a resolution is in place the markets will remain volatile with the main beneficiary being gold.
Even with the debt ceiling issue unresolved, the U.S. Treasury has a total of $99 billion in auctions scheduled for this week, consisting of 2 yr, 5yr and 7 yr notes. Bonds and stocks are both trading lower today and mortgage prices are worse by approximately .125%.
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