After a soft 20 yr auction on the heels of an eventful morning for the US Treasury, some further thoughts here on what has transpired. In my opinion, no lunch is free here. On one hand, we get lower long end rates (at least for today as I question the sustainability, just like with FX intervention) and Bessent is buying long term Treasuries well below par, likely those with coupons with a one handle or less that are trading at $.50 on the dollar and issued when short rates were at zero. But, by replacing that with T-bills currently yielding around 3.75%, US interest expense will go higher. Also, in response, the US dollar is trading at 3 month low today and if sustained, that imports inflation and could facilitate foreign selling of Treasuries for those not FX hedged. Lastly, with even more short term bond issuance, it ties the hands (among other ties, like excessive gov’t spending) of Kevin Warsh & Co because raising short term rates (which I do not think will happen anytime soon) would be even more expensive for the US government, further inflate US debts and deficits, and result in another rise in long term rates. And, what happens if inflation flares up again, if Warsh doesn’t hike, the long end will do it for him. What a box we are in.