The market for U.S. debt is weirder than you think

This is how the government creates the money it borrows

The U.S. Federal Reserve.

Do you remember what sent the stock market into turmoil last week? A spike in wage data convinced investors that higher inflation was just around the corner, leading to a sell-off in a bunch of U.S. Treasuries. That convinced the stock market that higher interest rates were just around the corner, leading to sell-offs there too. Temporary panic ensued. In other words, behind the stock market rout was a minor change in the U.S. debt market.

So now is a good time to examine that market in greater detail. Because it's weirder than you think.

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