Posted on 05/04/2010 10:09:53 AM PDT by blam
The Market Has Exposed Its Bluff Against The Dollar And U.S. Sovereign Debt
Vincent Fernando, CFA and Gregory White
May. 4, 2010, 12:51 PM
Despite all the beating America takes in the media for its currency and sovereign debt, investors are still fleeing out of most assets and into U.S. government bonds when markets get shaky.
The 30 year treasury is rallying, sending its yield to a 2010 low at 4.46%. Moreover, U.S. inflation expectations appear relatively tame. The spread between the regular 30-year bond and the inflation protected 30-year bond is 2.64%. On a five year view, looking at the spread between 5-year regular and inflation protected bonds, inflation expectations are just 1.98%
Meanwhile, the Dollar Index is rallying, partly due to a routing euro on the way to $1.30. Gold is falling.
Actions speak louder than words. The 30-year yield from Yahoo Finance:
[snip]
(Excerpt) Read more at businessinsider.com ...
Amazing. Our currency is the standard because we owe all the money and have the world’s consumers.
Unfortunately, we are being lulled into a false sense of security. Investors are leaving the Euro and rushing to US treasuries, hence interest rates are low.
The long term prognosis is not good for treasuries. Since the economy is not doing well, banks are investing in treasuries as well. When banks do not invest in the private market, wealth creation shrinks, leaving less capital for investment, both in treasuries and securities. Sooner or later this capital is going to dry up and rates on treasuries will go up.
Our say will come because we are on the same path as Greece. Who is going to bail us out?
Check this link after 9PM eastern time to see what I am talking about. The link will only work between 9pm-5am if you are not a paid member of TF. Even I can not view it right now.
Treasury Redeems $643 Billion In Treasuries In April:
http://www.tickerforum.org/cgi-ticker/akcs-www?post=135701
bump and mark for after 9pm.
BTW, 643 billion seems like a lot. Is it more than usual???
I believe I read that it was record. This includes rolled over debt.
Who is going to bail us out?
When everybody’s sovereign debt spins out of control, we will all join hands and sing Kumbaya in one, big Global Communist Potluck Supper and Clam Bake
Greece can't print Euros.
But we can print dollars.
Well then when you are paying $1000.00 a gallon for milk we will see how well that works. When Granny uses her whole savings account to buy 1 weeks groceries. That is assuming the banks are still open.
“Unfortunately, we are being lulled into a false sense of security”
Not me, The US Treasuries are the last chair in this game of musical chairs. The only thing left after that are things with true value (commodities/skills in demand).
I predicted this several months ago. There will be a flight from Eurozone investments into US investments. After all the other debt-ridden Euro countries begin their sovereign defaults, then investors will begin looking at what a horrible state the USA is in regarding sovereign debt, and BAM!!!!! True crash begins.
In the meantime, i’m riding the wave across the Atlantic and trying to make a few bucks. Already hedging with food and other necessary durables to outlast the inevitable shortages of gas and food.
Good morning Zimbabwe!!!!!!!!
I didn't say it was a good idea.
I was merely answering the question being asked, by giving one difference between Greece and the USA.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.