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  #1  
Old 05-08-2009, 09:31 AM
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Default Treasury rate watch

So, let's see if the trillions in debt actually get financed:
http://www.google.com/hostednews/ap/...WZGdQD981KVDG4


Quote:
Weak Treasury auction sends stocks lower

By TIM PARADIS and SARA LEPRO – 15 hours ago

NEW YORK (AP) — 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.
http://www.ustreas.gov/offices/domes...te/yield.shtml

Code:
May 2009
Date 	        1 mo 	3 mo 	6 mo 	1 yr 	2 yr 	3 yr 	5 yr 	7 yr 	10 yr 	20 yr 	30 yr
05/01/09 	0.06 	0.16 	0.31 	0.49 	0.92 	1.39 	2.03 	2.72 	3.21 	4.14 	4.09
05/04/09 	0.14 	0.19 	0.33 	0.52 	0.94 	1.40 	2.03 	2.70 	3.19 	4.11 	4.06
05/05/09 	0.14 	0.19 	0.34 	0.53 	0.98 	1.46 	2.05 	2.70 	3.20 	4.11 	4.06
05/06/09 	0.14 	0.19 	0.32 	0.51 	0.96 	1.43 	2.06 	2.70 	3.18 	4.12 	4.09
05/07/09 	0.15 	0.18 	0.32 	0.54 	1.00 	1.46 	2.15 	2.80 	3.29 	4.26 	4.25
(sorry about the formatting)
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Last edited by campbell; 05-11-2009 at 08:35 AM.. Reason: trying to fix formatting
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Old 05-13-2009, 02:55 PM
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Interesting p.o.v. from the FT:

http://www.ft.com/cms/s/0/5534bd04-3...nclick_check=1

Quote:
America’s triple A rating is at risk

By David Walker

Published: May 12 2009 20:06 | Last updated: May 12 2009 20:06

Long before the current financial crisis, nearly two years ago, a little-noticed cloud darkened the horizon for the US government. It was ignored. But now that shadow, in the form of a warning from a top credit rating agency that the nation risked losing its triple A rating if it did not start putting its finances in order, is coming back to haunt us.

That warning from Moody’s focused on the exploding healthcare and Social Security costs that threaten to engulf the federal government in debt over coming decades. The facts show we’re in even worse shape now, and there are signs that confidence in America’s ability to control its finances is eroding.
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Old 05-13-2009, 03:09 PM
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Let's see, Moody's vs. the federal government. I wonder who'll win that one. Moody's is government-sanctioned, after all.
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Old 05-13-2009, 04:09 PM
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Frankly, it doesn't matter what the ratings agencies rate Treasuries at. It's not like they're privy to info no one else has for determining the risk involved in buying Treasuries.

The institutions with restrictions requiring AAA-rated bonds are likely already beholden to the federal govt in a variety of ways. Sovereigns and private bondholders don't need Moody's to tell them that being a bondholder to the U.S. is not a safe place to be.

Anyway, sounds like a nice time to open up the discussion to what constitutes the "risk-free" rate.
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Old 05-21-2009, 04:40 PM
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This month in general has been a train wreck, but today was especially bad. 2/10, 2/30 spreads are getting very high. TIPS are rising. For the ten year to jump 18bp on a down stock market day is disconcerting.

Of special note is that this seems driven by supply concerns rather then some external shock, and supply concerns will be ongoing.

http://acrossthecurve.com/
Has a good write up.

It seems the Fed was unwilling to meet foreign CB selling interest via QE policy and as a result they are starting to bail.

Gold up, dollar down.
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Old 05-21-2009, 05:12 PM
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Quote:
Originally Posted by tenthring View Post
This month in general has been a train wreck, but today was especially bad. 2/10, 2/30 spreads are getting very high. TIPS are rising. For the ten year to jump 18bp on a down stock market day is disconcerting.

Of special note is that this seems driven by supply concerns rather then some external shock, and supply concerns will be ongoing.

http://acrossthecurve.com/
Has a good write up.

It seems the Fed was unwilling to meet foreign CB selling interest via QE policy and as a result they are starting to bail.

Gold up, dollar down.
Here's a permalink to the post referenced:
http://acrossthecurve.com/?p=5626

Thanks for pointing out that blog - didn't know that one.

ALSO: http://acrossthecurve.com/?p=5617

Several posts today, in fact.
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Old 05-22-2009, 02:46 AM
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Quote:
Originally Posted by campbell View Post
Frankly, it doesn't matter what the ratings agencies rate Treasuries at. It's not like they're privy to info no one else has for determining the risk involved in buying Treasuries.

The institutions with restrictions requiring AAA-rated bonds are likely already beholden to the federal govt in a variety of ways. Sovereigns and private bondholders don't need Moody's to tell them that being a bondholder to the U.S. is not a safe place to be.

Anyway, sounds like a nice time to open up the discussion to what constitutes the "risk-free" rate.
After the 2003 CCA Annual Meeting, a consulting actuary commented that he didn't believe US Treasuries were "risk free" (or even nearly risk free) when the national debt was $7 trillion.
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Old 05-22-2009, 11:54 AM
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And more - combining dollar & Treasuries news: [as they're obviously related]
http://online.wsj.com/article/SB124289873815142839.html

Quote:
The dollar is in retreat.

Even with Thursday's market drops, many investors who hoarded the dollar during the recent turmoil are shifting into riskier assets, in particular currencies of big commodities exporters that would benefit from global growth.

The dollar has lost ground against the euro -- tumbling to a 4-month low Thursday -- and has been beaten up even more relative to commodity based currencies such as the Canadian dollar and Brazilian real. Investors chasing the first glimmers of expansion are pulling dollars out of their mattresses and sending them to riskier locales, driving up currencies there.
http://www.bloomberg.com/apps/news?p...d=a8nXbdb2RJxI

Quote:
May 21 (Bloomberg) -- Stocks and Treasuries fell, and the dollar dropped to a four-month low on speculation the U.S. government’s creditworthiness is deteriorating.

U.S. stocks declined for a third day, extending a global slump, after jobless claims topped economists’ forecasts and Standard & Poor’s said the U.K. may lose its AAA credit rating. Treasury Secretary Timothy Geithner said after the markets closed that the Obama administration is committed to reducing the budget deficit amid concerns about creditworthiness.

“The markets are beginning to anticipate the possibility of” a downgrade to the U.S.’s top AAA credit rating, and it will “eventually” be lost, said Bill Gross, co-chief investment officer of Pacific Investment Management Co. in Newport Beach, California, in a Bloomberg Television interview. “It’s certainly nothing that’s going to happen overnight.”
....
Debt Spread

The spread between yields on 10-year notes and Treasury Inflation Protected Securities, reflecting the outlook among traders for consumer prices, reached 1.73 percentage points, the highest level since September. Sterling erased its decline versus the dollar on speculation a credit downgrade from Standard & Poor’s wasn’t imminent and two other rating companies affirmed the U.K.’s “stable” outlook.

....

Yields on 10-year notes rose the most since May 7 as the Treasury announced it would auction $101 billion in two-, five- and seven-year notes next week. The central bank bought $7.398 billion, or 16 percent, of the $45.694 billion in U.S. debt due in 2013 to 2016 offered by dealers for consideration. A gauge of inflation reached the highest level since September.

The yield on the 10-year note rose 15 basis points, or 0.15 percentage point, to 3.35 percent at 2:50 p.m. in New York, according to BGCantor Market Data. The 3.125 percent security due May 2019 fell 1 7/32, or $2.19 per $1,000 face amount, to 98 3/32.

The difference between two- and 10-year Treasuries rose 0.15 percentage point to 2.50 percentage points today, the steepest the so-called yield curve has been since Nov. 14.
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Old 05-26-2009, 07:19 AM
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Let's get ready!
http://www.telegraph.co.uk/finance/f...esistance.html

Quote:
The interest yield on 10-year US Treasuries – the benchmark price of long-term credit for the global system – jumped 33 basis points last week to 3.45pc week on contagion effects after Standard & Poor's issued a warning on Britain's "AAA" credit rating.

The yield has risen over 90 basis points since March when the US Federal Reserve first announced its controversial plan to buy Treasury bonds directly, a move designed to force down the borrowing costs and help stabilise the housing market.

The yield-spike may be nearing the point where it threatens to short-circuit economic recovery. While lower spreads on mortgage rates have kept a lid on home loan costs so far, mortgage rates have nevertheless crept back up to 5pc.

The Obama administration needs to raise $2 trillion this year to cover the fiscal stimulus plan and the bank bail-outs. It has to fund $900bn by September.

"The dynamic is just getting overwhelming," said RBC Capital Markets.

The US Treasury is selling $40bn of two-year notes on Tuesday, $35bn of five-year bonds on Wednesday, and $25bn of seven-year debt on Thursday. While the US has not yet suffered the indignity of a failed auction – unlike Britain and Germany – traders are watching closely to see what share is being purchased by US government itself in pure "monetisation" of the deficit.
....
Kyle Bass from the US fund Hayman Advisors said the markets were choking on debt.

"There isn't enough capital in the world to buy the new sovereign issuance required to finance the giant fiscal deficits that countries are so intent on running. There is simply not enough money out there," he said. "If the US loses control of long rates, they will not be able to arrest asset price declines. If they print too much money, they will debase the dollar and cause stagflation.

"The bottom line is that there is no global 'get out of jail free' card for anyone", he said.

The US is acutely vulnerable because it relies heavily on foreign goodwill. China and Japan alone hold 23pc of America's $6,369bn federal debt. Suspicions that Washington is trying to engineer a stealth default by letting the dollar slide could cause patience to snap, even if Asian exporters would themselves suffer if they harmed their chief market.
Maybe I should put "dollar watch" in here as well, because they're obviously connected.
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Old 05-26-2009, 04:15 PM
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Stagflation.
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"No one remembers 5K and I wrote a nice poem for the occassion. No one remember's 10k. No one will remember 20k either." - Sir Post-A-Lot

"One of the ordinary modes, by which tyrants accomplish their purposes without resistance, is, by disarming the people, and making it an offense to keep arms."
-- Constitutional scholar and Supreme Court Justice Joseph Story, 1840

"The problem with socialism is you eventually run out of other peoples' money." -- Margaret Thatcher

"Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master." -- George Washington

"Caca pasa" - Anonymous
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