Treasuries bond "bubble" slowly bursting
Submitted by Jim Brown on Tue, 01/27/2009 - 14:35
NEW YORK (Reuters) - The Treasury bond "bubble" looks like it's leaking air.
Over the last three weeks, investors have been selling U.S. Treasury bonds heavily, giving the 30-year Treasury bond's yield this week its biggest weekly jump since 2001, shortly after the September 11 attacks on the United States.
The sudden rise in lending rates complicates the U.S. push to lower mortgage rates and other consumer borrowing costs and kick-start the fragile American economy.
"Treasury bonds have sold off as markets have started to digest the rapidly growing volume of future government issuance," said Mohamed El-Erian, chief executive of bond giant Pacific Investment Management Co, or Pimco.
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When this bubble pops, the dollar will be fully exposed to pop.
Another important part of this article below:
"The proximate cause for the selling in Treasuries stems from
expectations that the government will need to borrow about $2 trillion of debt this year to finance its rescue packages for the battered banking sector. Already, outstanding Treasury debt stood at $5.5 trillion at the end of September."
"With this in mind, investors are fleeing Treasuries. In fact, while the Dow Jones industrial average .DJI is down 7.5 percent so far this year, the 30-year Treasury bond is down even more at 10 percent. This is contrary to the usual dynamic, where Treasuries move in the opposite direction of stocks."
Countdown
It's only a matter of time before Ben gets the copter out of the hangar and opens the spigots wide open by directly purchasing Treasuries.
http://federalfallacy.com
http://federalfallacy.com
bye bye dollar! "When
bye bye dollar!
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
“A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.” (Prov. 22:3; 27:12 KJV)
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