Posted on 07/29/2011 7:11:29 AM PDT by mrsmith
...One other factor that could lift bond prices is that Treasury could be forced to stop selling new bonds, which would limit the supply available for investors. Limiting supply typically helps to lift prices.
Thursday's auction of 7-year Treasuries came in with a yield of 2.25%, the lowest rate Treasury has had to pay for notes of that term since last November.
(Excerpt) Read more at money.cnn.com ...
Don’t believe anything that comes out of CNN; their “news” comes from their fax machine’s talking points issued by the DNC.
If the bonds go into default, that would even more sharply limit their supply, making them go up even more. Only when they all went to zero, would they finally go to infinity.
Always nice to have the ex-spurt view.
Oh my?
Yeah we’ll probably see in the coming days why Reid wanted them to switch from the “it would be the end of the world!” meme to “hey, it would be great!”.
Thanks mrsmith.
But if they do have to dump them, then bonds will be in oversupply and rates will go up.
Duh! Exactly!
Want to see the stock market shoot up and the dollar rise? Show the world that the USA is going to cut its massive deficit!
He would never realize it, but enforcing the debt ceiling would actually be the best economic “stimulus” Obama could enact - and with 16 more months to the election, might actually HELP his re-election campaign.
I wonder if the raters would cause that much trouble in the market without reason. “Deadlock” wouldn’t give them reason to downgrade us. Of course after a bad debt-ceiling rise, which is what we’ll probably get, is passed then they would have reason.
Obama was so courageous for holding out. That was his plan from the get go.
“We can look at the prices of put options on government bond ETFs to see whether the put options are expensive, which would suggest that the options market is suggesting a substantial risk of a sell-off in government bonds and rising yields... the options prices do not suggest that the demand for ‘insurance’ against a big sell-off in government bonds is high at all. “
http://www.businessinsider.com/government-default-the-market-vs-the-media-2011-7
Interest rates are already too low.
If cheap money was the solution to recovery we would have a red hot economy right now.
Manipulating interest rates by pumping fiat currency into the economy to keep rates artificially low is one of the major factors leading to the crash of the economy.
And it is one of the factors slowing down a real correction and subsequent recovery.
All we are getting out of the cheap money strategy is inflation.
Even better the media will credit the recovery to his stimulus and Obamacare and blame problems on the ‘Republican-caused debt deadlock’!
Indeed, this may have been the plan all along...
Nah, just kidding!
Has O ever put bondholders first?
Look at what he did to GM. I can completely see the big O trying to get away with shafting owners of government debt, and trying to pay off his favourites.
Yep. interest rates are low because there is no growth except in the government. There’s no growth because the government is taxing and borrowing money out of the economy and spending it on welfare, keeping down their interest rate... a vicious circle.
But, of course, less debt is still a good idea.
You know if our economy did manage to grow- despite the gov’s efforts- interest rates go up and all that ‘cheap’ debt gets expensive.
Yep - Yin vs. Yang. No easy answers.
The other side of the coin is that the fed is beating the hell out of savers, discouraging prudency and luring people into unsound financial decisions.
Not too long ago the government encouraged saving and avoidance of excessive personal debt. Over the last 20 years they have gradually reversed positions and now implement policies that discourage (penalize) saving and encourage excessive debt.
Doesn't it say something that the populace is now referred to as "consumers"?
Recall that both presidents Bush and Obama appealed to people to get out and spend.
“What does a downgrade really mean? Treasury debt will still be the highest-quality, most liquid market in the world debt,” said Robert Williams, director of research at Sage Advisory Services in Austin, Texas. “We don’t think it has a major impact on rates, even if there is a downgrade.”
http://blogs.investors.com/capitalhill/index.php/home/35-politicsinvesting/2707-treasury-etfs-fly-despite-likely-us-debt-downgrade?src=HPLNews
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.