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  #11  
Old 05-27-2009, 08:16 AM
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Originally Posted by Wigmeister General View Post
Stagflation.
Yep. Been there, done that. Didn't even get a t-shirt. sigh
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  #12  
Old 05-27-2009, 11:55 AM
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China is unamused:
http://www.telegraph.co.uk/finance/f...ing-money.html

Quote:
Richard Fisher, president of the Dallas Federal Reserve Bank, said: "Senior officials of the Chinese government grilled me about whether or not we are going to monetise the actions of our legislature."

"I must have been asked about that a hundred times in China. I was asked at every single meeting about our purchases of Treasuries. That seemed to be the principal preoccupation of those that were invested with their surpluses mostly in the United States," he told the Wall Street Journal.

His recent trip to the Far East appears to have been a stark reminder that Asia's "Confucian" culture of right action does not look kindly on the insouciant policy of printing money by Anglo-Saxons.
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  #13  
Old 05-27-2009, 11:57 AM
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Originally Posted by campbell View Post


let's just call it even for all the poison toys, rotten-egg-smelling drywall, and the poor craftsmanship.

What did they think we were going to do with our debt? Just "ignore it away?"
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  #14  
Old 05-27-2009, 02:57 PM
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let's just call it even for all the poison toys, rotten-egg-smelling drywall, and the poor craftsmanship.

What did they think we were going to do with our debt? Just "ignore it away?"
Like most government boondoogles the Chinese government didn't really think through their economic policy. They get the same retarded economic advise our leaders get and are subject to the same political influences and corruption.
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Old 05-27-2009, 04:23 PM
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http://meganmcardle.theatlantic.com/...reign_woes.php

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Short term yields firmed up this week on better consumer confidence data, but short-term yields shouldn't be what we worry about. Eventually the treasury has to roll that debt or pay it off, and if interest rates spike, that can prove catastrophic--just ask Argentina. The five year, seven year, and especially the thirty year auctions will tell us much more.

If the longer-yield debt again registers weak demand, the administration is going to have to address this problem. Up until now, most of the debate over the administration's spending plans has focused on the political problem: will the American public accept higher spending? But the problem isn't the spending; it's how to pay for it. If the spending were attached to tax hikes, this would cut into its popularity (though I don't know by how much). That's one of the reasons that administrations like to fund their new spending with borrowing. But you can't long do this on a scale that freaks out the bond markets--just ask Argentina. And these days, the bond markets are easily freaked.
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  #16  
Old 05-28-2009, 12:42 AM
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http://www.cnbc.com/id/30968861

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A selling spree in Treasurys pushed rates higher, taking the yield curve to its steepest on record as spreads between the 2-year and 10-year widened by over a dozen basis points on Wednesday alone.

The 10-year saw its yield move above 3.70 percent, after trading at 3.55 percent the previous day. The selling wave hit bonds shortly after 1 p.m., even after the auction of $35 billion in 5-year notes was well received.

"It was a great auction. It was just the follow through that was a problem," said Brian Edmonds, head of interest rate trading at Cantor Fitzgerald.

Traders are bracing for more of the same Thursday. The Treasury is auctioning another $26 billion in notes, this time 7-years.

The heavy issuance - more than $100 billion this week alone - has been pressuring the market.
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Old 05-28-2009, 09:49 AM
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http://online.wsj.com/article/SB124347148949660783.html

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The Bond Vigilantes
The disciplanarians of U.S. policy makers return.

They're back. We refer to the global investors once known as the bond vigilantes, who demanded higher Treasury bond yields from the late 1970s through the 1990s whenever inflation fears popped up, and as a result disciplined U.S. policy makers. The vigilantes vanished earlier this decade amid the credit mania, but they appear to be returning with a vengeance now that Congress and the Federal Reserve have flooded the world with dollars to beat the recession.

Treasury yields leapt again yesterday at the long end, with the 10-year note climbing above 3.7%, its highest close since November. Treasury yields had stayed low, and the dollar had remained strong, as long as investors were looking for the safest financial port amid the post-September panic. But as risk aversion subsides, and investors return to corporate bonds and other assets, investors are now calculating the risks of renewed dollar inflation.
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  #18  
Old 05-29-2009, 03:53 PM
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http://www.google.com/hostednews/ap/...fUB9wD98FG0GG2
Quote:
Strong 7-year note auction lifts Treasury prices

By SARA LEPRO – 22 hours ago

NEW YORK (AP) — Long-term borrowing rates fell back on Thursday as investors returned in numbers to pick up newly issued Treasury notes.

The 10-year Treasury note — a widely used benchmark for home mortgages and other kinds of consumer loans — gained nearly a point, sending its yield back down to 3.62 percent from 3.75 percent the day before.

Investors had sold off bonds on Wednesday, pushing long-term yields to their highest level in six months, on worries that the flood of U.S. government debt hitting the market this year would overwhelm demand.

Those concerns abated on Thursday after the Treasury Department saw solid demand at an auction of $26 billion in seven-year notes, the third and final auction this week in which the government sold a total of $101 billion of debt.
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  #19  
Old 05-30-2009, 09:07 AM
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Steepness of curve:
http://www.calculatedriskblog.com/20...eld-curve.html



You can get a bigger graph by going to the link.
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Old 06-02-2009, 12:06 PM
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Whyever would the yield curve steepen? It's quite the mystery to the Fed:
http://www.reuters.com/article/ousiv...54U1NZ20090531

Quote:
Federal Reserve puzzled by yield curve steepening

WASHINGTON (Reuters) - The Federal Reserve is studying significant moves in the U.S. government bond market last week that could have big implications for the central bank's strategy to combat the country's recession.

But the Fed is not really sure what is driving the sharp rise in long-dated bond yields, and especially a widening gap between short and long term yields.

Do rising U.S. Treasury yields and a steepening yield curve suggest an economic recovery is more certain, meaning less need for safe haven government bonds and a healthy demand for credit? If so, there might be less need for the Fed to expand the money supply by buying more U.S. Treasuries.

Or does the steepening yield curve mean investors are worried about the deterioration in the U.S. fiscal outlook, or the potential for a collapse in the U.S. dollar as the Fed floods the world with newly minted currency as part of its quantitative easing program. This might be an argument to augment to step up asset purchases.

Another possibility is that China, the largest foreign holder of U.S. Treasury debt, has decided to refocus its portfolio by leaning more heavily on shorter-term maturities.
And yadda yadda yadda.

Oh wait, I think we see a glimmer of a clue:

Quote:
An obvious culprit for the move in bond yields is the country's record fiscal deficit, which will generate a massive amount of new government issuance.

The U.S. Treasury must sell a record net $2 trillion in new debt in 2009 to fund a $1.8 trillion projected fiscal deficit, resulting from falling tax revenues, an economic stimulus package and sundry bank bailouts.

Investors began to worry this could erode the United States' cherished triple-A sovereign credit rating when Standard and Poors's on May 21 revised its outlook for Britain's triple-A status to negative from stable, blaming higher government debt.
It doesn't matter what the ratings agencies say [they've got obvious pressures on them to not change ratings on U.S. sovereign debt]. They've got no secret info re: the U.S. federal budget.

Plenty of fixed income investors can look at the money outlook, as well as how bondholders have been treated recently by the U.S. government, and decide that they'd like more money right now, thank you very much.
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