More trouble coming?

Weak demand at a Treasury bond auction touched off worries in the stock market Thursday about the government's ability to raise funds to fight the recession.

The government had to pay greater interest than expected in a sale of 30-year Treasurys. That is worrisome to traders because it could signal that it will become harder for Washington to finance its ambitious economic recovery plans. The higher interest rates also could push up costs for borrowing in areas like mortgages.

This is the US Government rather than ours, but coming so soon after a failure of a UK gilt auction, it does start to look like the markets sending a signal to Messrs Brown and Obama.

Hold on to your hats.

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