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Treasury yields soar
cnn ^ | 6/10/09 | Catherine Clifford

Posted on 06/10/2009 11:22:41 AM PDT by mathprof

Government debt prices tumble as new debt is prepped for auction and Russia says it will sell some of its holdings.

Treasury yields soared to seven-month highs Wednesday as the government prepared to sell $19 billion in 10-year notes and Russia said it would reduce its share of U.S. debt.

The benchmark 10-year note fell 17/32 to 93-16/32, and its yield surged to 3.93% from 3.86% late Tuesday. The yield was at its highest levels since settling Nov. 3 at 3.96%.

Bond prices and yields move in opposite directions.

The 2-year note dipped 1/32 to 99-4/32, and its yield rose to 1.33%. The yield on the 3-month note held steady at 0.18%.

The 30-year bond sank 1-5/32 to 92-11/32, and its yield jumped to 4.73% from 4.65%.

Earlier in the session, the yield on the longbond reached as high as 4.73%. The last time the 30-year bond settled this high was nearly a year ago on June 19, 2008, when the yield ended the session at 4.76%.

Debt sale: The government continued to sell large amounts of debt to fund the stimulus aimed at boosting the economy.

(Excerpt) Read more at money.cnn.com ...


TOPICS: Culture/Society; Extended News; News/Current Events; Russia
KEYWORDS: debt; inflation; obama
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To: mathprof
Very interesting. Just as I am reading Milton Friedman's Money Mischief and finished reading the chapter on treasury lending spurring inflation. Wow.
21 posted on 06/10/2009 12:15:49 PM PDT by Nachum (The complete Obama list at www.nachumlist.com)
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To: Mr. Lucky
...and in this instance who could blame Obama for intervening? The bidders at these Treasury auctions are nothing more than greedy speculators who put their private interest above the public good.

Do you think if Obama would accuse foreign investors, such as China, of being greedy that they would take kindly to it? Like accepting lower interest rates so that 'the one' could continue out of control borrow/spend?

No! I didn't think so.

22 posted on 06/10/2009 12:17:04 PM PDT by Voltage
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To: Principled

“What, specifically, will happen when our debt isn’t purchased by anyone?”

It will be purchased, it’s just that it will be expensive.

Unfortunately, the Treasury will be purchasing it more and more


23 posted on 06/10/2009 12:22:21 PM PDT by cowtowney
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To: Sig Sauer P220

That’s what I’m wondering about. I just recently refinanced my mortgage at 4.5% for 30 years. I was wondering what would happen to the financial industry if all of a sudden interest rates jumped to 10-15-20% per year...You would have a major crisis and uprising if the government allowed inflation indexing of mortgages like many other countries do (3rd world countries...that is). Growing up in Brazil during my childhood, I remember inflation rate exceeding savings rates....People purchased goods as soon as they received their paycheck...People threw their money at real estate, even cars for investments.


24 posted on 06/10/2009 12:29:09 PM PDT by Maringa
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To: mathprof

where should i dump my liquid savings to keep up once inflation hits? (i need it liquid seeing i don’t qualify for unemployment)


25 posted on 06/10/2009 12:37:49 PM PDT by kpp_kpp
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To: Principled

but what exactly will happen? ————Bwaney will have Fannie buy it-—with an IOU...??? LOL


26 posted on 06/10/2009 12:44:31 PM PDT by litehaus (A memory tooooo long)
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To: Maringa

I had been looking at buying a smaller house, but the offer we made in Feb fell through. We have looked at building a house on a lot, but I was expecting in April to have until August to get a low interest rate. I hadn’t expected rates to go up this much in just 6 weeks.

We haven’t quite yet settled on a floor plan, so it may go up enough to put us out of the market...at the rate it is going, 7% or more by late July?


27 posted on 06/10/2009 12:59:54 PM PDT by Mr Rogers (I loathe the ground he slithers on!)
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To: mathprof

IIR, the Treasury took steps in April to drive rates down - namely, they printed an extra 1,000 Billion dollars.

They were boasting about their success - but now rates are up almost a percentage point in 6 weeks?

How are those house sales and refinancings doing now...


28 posted on 06/10/2009 1:04:31 PM PDT by Mr Rogers (I loathe the ground he slithers on!)
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To: Voltage
OK, well then American retirees who invest in Treasury bills are nothing but greedy speculators whose assets should be seized without recourse in a court of law.

Chinese purchasers of the notes are citizens of the world whose good deeds are countless and before whom we poor, miserable, unreformed former capitalists should prostrate ourselves in trembling gratitude that they have graciously consented to finance the One's remaking of society.

29 posted on 06/10/2009 1:05:12 PM PDT by Mr. Lucky
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To: kpp_kpp

let me know if you get an answer, I need to know too.


30 posted on 06/10/2009 1:14:07 PM PDT by jpsb
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To: kpp_kpp

let me know if you get an answer, I need to know too.


31 posted on 06/10/2009 1:14:09 PM PDT by jpsb
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To: Mr Rogers
How are those house sales and refinancings doing now...

Over half have fallen through.

32 posted on 06/10/2009 1:14:34 PM PDT by Crawdad (If you're in a fair fight, your tactics suck.)
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To: mathprof

Yealds didn’t sour, bring on the 18-20% interest rates that we enjoyed under Carter!!!


33 posted on 06/10/2009 1:15:33 PM PDT by dalereed
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To: Mr. Lucky

“The bidders at these Treasury auctions are nothing more than greedy speculators who put their private interest above the public good.”

Shove your public good where the sun doesn’t shine.


34 posted on 06/10/2009 1:17:58 PM PDT by dalereed
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To: dalereed
I'm shocked by your intransigence.

Are you defending people who are so selfish as to work hard, lead a life of thrift, educate their children and try to save for their own retirement?

35 posted on 06/10/2009 1:35:39 PM PDT by Mr. Lucky
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To: jpsb

no answers... but this is a pretty good, concise explanation of the problem:
http://online.wsj.com/article/SB124458888993599879.html
scary graph too.

“With an increased trust in the overall banking system, the panic demand for money has begun to and should continue to recede. The dramatic drop in output and employment in the U.S. economy will also reduce the demand for money. Reduced demand for money combined with rapid growth in money is a surefire recipe for inflation and higher interest rates. The higher interest rates themselves will also further reduce the demand for money, thereby exacerbating inflationary pressures. It’s a catch-22.

“It’s difficult to estimate the magnitude of the inflationary and interest-rate consequences of the Fed’s actions because, frankly, we haven’t ever seen anything like this in the U.S. To date what’s happened is potentially far more inflationary than were the monetary policies of the 1970s, when the prime interest rate peaked at 21.5% and inflation peaked in the low double digits. Gold prices went from $35 per ounce to $850 per ounce, and the dollar collapsed on the foreign exchanges. It wasn’t a pretty picture.”


36 posted on 06/10/2009 1:38:25 PM PDT by kpp_kpp
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To: mathprof
At least I have a fixed-rate mortgage.

If they can screw the bondholders with impunity, do you really think that "unfair" fixed mortgage is safe. Ya'll be havin thirld world acorns demonstratin in front o yo 3 car garage.

37 posted on 06/10/2009 1:41:02 PM PDT by Stentor
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To: mathprof

Does this mean that interest rates on CD’s will also go up? Thanks.


38 posted on 06/10/2009 1:44:23 PM PDT by BlueAngel
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To: jpsb

everything points to gold...
http://ezinearticles.com/?3-Investments-to-Hedge-Against-Inflation&id=2285781

my hesitation is that i don’t want to be the one who bought gold at ‘81 prices and has to hold it for 30 years. but i guess all signs are pointing to mid 70s, not early 80s, even though gold is breaking $1000/oz.


39 posted on 06/10/2009 1:45:26 PM PDT by kpp_kpp
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To: Principled

When I downsized houses, I pulled out $200 grand @ 5% for 30 yr. I plan to pay it back with Baraqqi minibucks.


40 posted on 06/10/2009 1:46:40 PM PDT by nascarnation
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