Paid down

Stein was writing about trade deficits. The revolving balance just illustrated his law in one billing cycle.

• Tuesday’s issue said revolving credit above 6% or shrinking would be news. The Fed’s G.19 printed -4.2% at an annual rate for August, down from +2.5% in July (Fed G.19). Balances fell to $1,352.4 billion from $1,357.2 billion. Households paid almost $5 billion off their cards in one month, before the September hike reached a single statement. That’s a borrower who was already pulling back, not one the Fed pushed.
• Treasury sold $39 billion of 10-year notes Wednesday at 5.30%, 3 basis points above Tuesday’s close, the highest 10-year stop in at least five years of posted results, with bids covering 2.77 times (TreasuryDirect). Our line was a stop above 5.30%. This one landed right on it. The S&P 500 closed at 7,801.77, down 0.22% from Tuesday’s record (Yahoo Finance). The 10-year finished at 5.28% and the 30-year at 5.67%, up 3 basis points ahead of today’s sale (Treasury).
• The FOMC minutes confirmed the vote: 12 to 0 for a quarter point, nobody wanting a hold, no push for a half (Fed). Most participants expected another increase by year-end, and several viewed the current rate as not yet restrictive. Junk-rated companies paid 8.03% to borrow Tuesday with their spread at 3.03 points, the tightest since Sept. 25 (FRED, FRED). Credit markets tightened into the minutes. The members who called policy mild might note that.

Threshold: noon, 1:00

Freddie Mac’s weekly 30-year prints at noon ET from 7.28% as of Oct. 1 (Freddie Mac). Mortgage News Daily’s daily quote rose to 7.59% Wednesday from 7.56% (Mortgage News Daily). News is a weekly jump above 7.35%.

Treasury sells $22 billion of 30-year bonds at 1 pm (TreasuryDirect). The last 30-year, Sept. 10, stopped at 5.308%. Wednesday’s close was 5.67% (Treasury). News is a stop above 5.70% or a bid-to-cover under 2.3.

Who pays: the Treasury’s own coupon

The government sold $97 billion of notes this week: $58 billion of 3-year at 4.932% and $39 billion of 10-year at 5.30% (TreasuryDirect). Today it adds $22 billion of 30-year paper. The 10-year stop is almost half a point above September’s 4.834% and about 1.4 points above the Fed’s overnight range of 3.75% to 4.00%.

The mechanism, once: Treasury auctions new debt to fund the deficit, and the coupon is whatever bidders demand. A $39 billion 10-year at 5.30% costs the government roughly $2.1 billion a year in interest. At September’s 4.834% it would have cost about $1.9 billion. One month, one maturity, $200 million more per year.

Payer: the government, funded by the taxpayer. Payee: the bondholder collecting the coupon. I’d note the Fed’s overnight rate sits at 3.90% and the 10-year just priced at 5.30%. That 1.4-point gap is what the market charges for a decade of commitment, and it grew about half a point since September.

Net net: $97 billion of new paper this week, with the 10-year costing the government the most in at least five years. The Treasury pays what the market asks, and the market just asked for more.

Headlines

• Revolving credit shrank in August, but total consumer credit rose to $5,196.8 billion because nonrevolving balances, mostly auto and student loans, grew at a 4.1% rate (Fed G.19). Card debt fell. Everything else kept growing.
• October hike 16% on Kalshi, December 70% (Kalshi). Polymarket’s 2026 hike count: one 23%, two 67%, three 9% (Polymarket). The minutes didn’t move the price.
• Regular gas $4.37 and diesel $6.30 (AAA). An Iran-Oman Hormuz shipping agreement by Oct. 31 is 20% on Polymarket, up four points from Tuesday (Polymarket). September CPI prints Oct. 14 at 8:30 ET (BLS).

Freddie at noon. The long bond at 1.