Steil says that 20 years ago, 76% of Treasury buyers were rate-insensitive, mostly central banks buying as a matter of routine. That share is now 43%. Every new dollar of deficit has to be sold to buyers who demand a better price.
…as part of their normal reserve. They didn't even think about it. They didn't even think about whatever the market rate was. They told them. They bought it. So you go back 20 years and 76% of the market were what we would call rate-insensitive investors. That was a wonderful situation for us. And
when you say rate-insensitive investors, meaning they would buy treasuries, whatever the price was that day. That's right. So
mostly central banks. Right. That figure is now down to 43%. So this is a big problem for us because the more debt we issue, the more interest rate-sensitive investors we have to attract into the market to buy. Yes. So what happens is you get an accelerationist effect on the rise in interest rates. Okay. Because the profile of our investors is getting worse and worse as the deficit gets worse. So that's
the U.S. What about France?
Well, France is in an even uglier position because virtually all of their investors are interest rate sensitive. Like
I said before, nobody wakes up any day and says, I'm just going to buy French bonds.