YOUR SHARE OF THE NATIONAL DEBT: $85,813.43

July 29th, 2025 based on US Census Bureau Population Estimate of 342,154,640 and US Treasury debt calculation.

Financial Events

August 17th, 2025: Treasury Bill Auction

The treasury bill auction for 13 and 26 week (3 and 6 month) bills is pricing in a 0.25% rate cut despite last weeks unexpectedly high core PPI of 0.6%. The 13 week bills priced at 4.150% and the 26 weeks at 3.970%. Other financial metrics included EA balance of trade well below the €13b estimate and the previous months €16.5b at €7b.

We bootstrapped interest rates to determine the probability of a rate cut using multiple treasuries and calculating equivalencies. Our numbers mostly match the CME Group's 80% chance of 25 basis cut to a 400-425 target for September (utilizing the 4, 6, and 8 week auctions) and a 42% chance of a second rate cut for October 29th to 375-400. When calculating the probabilities, it is important to remember that the treaury yield is quoted on a 360 day year (vs. 365), and that the figures do not calculate competitive bids that are highballed to guarantee issuance and bids that are above the investment rate.

July 29, 2025: Trade Balance and Advance Inventories

Monthly Advance Economic Indicators, June 2025 released showing a decline of 10.8% in the goods defict $86.0 Billion from $96.4 Billion in May, a 0.2% increase in wholesale inventories to $907.7 Billion from $906.0 Billion and an increase in retail inventories of 0.3% to 808.7 Billion from 806.7 Billion from May to June 2025.

The decrease brings the goods deficit to levels last seen in September, 2023, and was not surprising, given the 12% increase seen in May. Because of potential front-loading of wholesale inventories due to tariff uncertainty, we hesitate to have confidence in the meaning of these figures.

Wholesale and retail inventories should be watched closely. The increase in both figures when the trade deficit decreases indicates either an increase in domestic production or a decrease in consumption. The National Association of Manufacturers reported a decrease in the first quarter of 2025, and the Institute for Supply Management (ISM) reported June 2025 Manufacturing at 49%, the fourth consectutive month of contraction. This leads us to believe that a short term decrease in consumption may be in play.

July 29, 2025: Consumer Confidence

The Conference Board's Consumer Confidence index rebounded somewhat from 95.2 to 97.2 from June to July, 2025. This represents a strong recovery from the 86 reported for April. An index number near 100 is generally considered to be neutral, representing normal growth expectations. Given the overall state of the economy, 97.2 seems like a low number. We suspect this is a result of consumers feeling nervous about the economy, but being happy about their individual positions. If the inflation and recession warnings end up being false flags, we should expect solid numbers in the future.

July 29, 2025: Job Openings

The Bureau of Labor Statistics JOLTS report of 7,437,000 shows a continuation of the relatively flat numbers that have been seen since June, 2024. The pre-covid trend (May 2015 - Oct 2019) give a formula of 3.638 + .0198(x) which would indicate a trend expectation of 6.02 vs the reported 7.43, which leads us to feel comfortable with a somewhat flat curve. The BLS Employment Situation report numbers showing good unemployment numbers at 4.1% gives us confidence in that assessment. The labor participation rate of 62.3% looks like a reasonable continuation of the decreasing rates we saw starting around the 2008 financial crisis, when the rate was 66% (November, 2007).