informationliberation
The news you're not supposed to know...




An Introduction to Austrian Economics: Understand Economics, Understand Everything
The Century of the Self: The Untold History of Controlling the Masses Through the Manipulation of Unconscious Desires
The Disappearing Male: From Virility to Sterility

The Obama Deception: The Mask Comes Off
Operation Gladio: The Hidden History of U.S. Sponsored False Flag Terrorism in EuropeThe New American Century: The Untold History of The Project for the New American Century
(more)
Article posted Apr 02 2010, 8:00 PM Category: Economy Source: The Telegraph Print

Sell-off in US Treasuries raises sovereign debt fears

Investors are braced for a further sell-off in US Treasuries after dramatic moves last week raised fears that the surfeit of US government debt is starting to saturate bond markets.
By Ambrose Evans-Pritchard


The yield on 10-year Treasuries the benchmark price of global capital surged 30 basis points in just two days last week to over 3.9pc, the highest level since the Lehman crisis. Alan Greenspan, ex-head of the US Federal Reserve, said the abrupt move may be "the canary in the coal mine", a warning to Washington that it can no longer borrow with impunity. He said there is a "huge overhang of federal debt, which we have never seen before".

David Rosenberg at Gluskin Sheff said Treasury yields have ratcheted up 90 basis points since December in a "destabilising fashion", for the wrong reasons. Growth has not been strong enough to revive fears of inflation. Commodity prices peaked in January and US home sales have fallen for the last three months, pointing to a double-dip in the housing market.

Mr Rosenberg said the yield spike recalls the move in the spring of 2007 just as the credit system started to unravel. "The question is how the equity market is going to handle this back-up in rates," he said.

The trigger for last week's sell-off was poor demand at Treasury auctions, linked to the passage of the Obama health care reform. Critics say it will add $1 trillion (670bn) to America's debt over the next decade, a claim disputed fiercely by Democrats.

It is unclear whether China is selling US Treasuries after cutting its holdings for three months in a row, or what its motive may be. There are concerns that Beijing may be sending a coded message before the US Treasury rules next month on whether China is a "currency manipulator", though experts say China is clearly still buying dollar assets because it is holding down the yuan against the greenback. Some investors may be selling Treasuries as a precaution against a trade spat.

Looming over everything is the worry that markets will not be able to absorb the glut of US debt as the Fed winds down its policy of bond purchases, starting with an exit from mortgage-backed securities. It currently holds a quarter of the $5 trillion of the MBS market.

The rise in US bond yields has set off mayhem in the 10-year US swaps markets. Spreads turned negative last week, touching the lowest level in 20 years. The effect was to drive credit costs for high-grade companies such as Berkshire Hathaway below that of the US government. This may have been a technical aberration.





Latest Economy
- American Ranking Plummets in Global Index of 'Personal Freedoms'
- Your "Children Will Be Fined" If You Fail To Sign Up For Obamacare: People Are Going To Be In for A Shock
- The End of QE Is Not the End of Bad Policy
- "They Just Want The Money!" - The IRS Can Now Seize Accounts On Suspicion Alone
- Hillary: 'Don't Let Anybody Tell You' That 'Businesses Create Jobs'
- Does Ebola Justify the State?
- Low Inflation? The Price Of Ground Beef Has Risen 17 Percent Over The Past Year
- EFF, Internet Archive, and reddit Oppose New York's BitLicense Proposal









No Comments Posted Add Comment


Add Comment
Name
Comment

* No HTML


Verification *
Please Enter the Verification Code Seen Below
 


PLEASE NOTE
Please see our About Page, our Disclaimer, and our Comments Policy.


FAIR USE NOTICE
This site contains copyrighted material the use of which in some cases has not been specifically authorized by the copyright owner. Such material is made available for the purposes of news reporting, education, research, comment, and criticism, which constitutes a 'fair use' of such copyrighted material in accordance with Title 17 U.S.C. Section 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner. It is our policy to respond to notices of alleged infringement that comply with the DMCA and other applicable intellectual property laws. It is our policy to remove material from public view that we believe in good faith to be copyrighted material that has been illegally copied and distributed by any of our members or users.

About Us - Disclaimer - Privacy Policy



Advanced Search
Username:

Password:

Remember Me
Forgot Password?
Register

This One Police Department Shot 92 Dogs in Three Years. One of the Officers Has Killed 25 By Himself - 11/19Tennessee Drug Interdiction Officers Stomp All Over Traveling Couples' Rights En Route To Seizing Nothing At All - 11/20This is What a High School Football Game Looks Like In a Police State - 11/21Casino Can Steal NJ Man's Home Through Eminent Domain For No Specific Reason, Judge Rules - 11/20No Charges For Cop Filmed Breaking Man's Face For Failure To ID, "Shoulder Thrust" Made Cop Fear For His Safety - 11/21Very Large Cop Waylays High School Girl, Chaos Ensues After Students Become Angry at the Deputy - 11/21Cops Assault And Arrest Woman for No Reason, Leave Her Cuffed and Naked in Public for 30 Minutes - 11/19Texas Cop Indicted For Stealing Cash Out Of People's Wallets After Asking For ID - 11/20

Rialto, CA Police Made to Wear Cameras, Use of Force Drops by Over Two-ThirdsCop Who Karate Chopped NY Judge In Throat Gets Off Scot-FreeFlorida Cop Smashes Compliant Woman's Face Into Car -- "Maybe Now You Can Understand Simple Instructions"VIDEO: Lapel Cam Reveals A Day In The Life Of A U.S. Police Officer (Tasing, Beating, Breaking & Entering, Stomping On Heads... and Laughing About It)Caught On Tape: Officer Sucker Punches Inmate In Face, Files Report Claiming 'Self Defense'Insult Person On Twitter, Go To JailSWAT Team Brings TV Crew To Film Raid Against Threatening Internet Critic -- Raids Innocent Grandma InsteadCop Karate Chops NY Judge In The Throat
(more)

 
Top