One of the factors in your FICO score is your credit utilization. That is, how much money you have borrowed. Well, today the Treasury had a bond auction, and the lenders were not biting.
Investors gave an unexpectedly cool response to a $24 billion auction of 5-year Treasury notes Wednesday, which also sent prices for Treasurys lower…Bond prices fell after the auction. The yield on the benchmark 10-year Treasury note, which moves opposite its price, jumped to 2.78 percent from 2.71 percent late Tuesday. The yield on the three-month T-bill rose to 0.19 percent from 0.17 percent Tuesday.
I guess this means that the Nation’s FICO score just took a hit. Investors are starting to shy away from loaning money to Uncle Sam. The government has to respond in the only way available: raise yields. We are on a rapid accelerating slide towards becoming a sub-prime borrower. As the yields climb, interest will take a larger cut of the budget, meaning that the deficit will climb. This will increase the debt, causeing the deficit to climb further. I wonder what the breaking point is…