I’d rather have stocks, getting 4.65%. There’s some risk, of course, but also potential upside.
I’d love to see a breakdown of WHO is buying them...if it’s the Fed, then they are just blowing up the bubble.
So far the downgrade isn’t effecting the treasury auctions...so far.
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Which raises two questions:
1. Why did the market crash on Monday?
2. What will Treasury yields be when the Italian Panic of 2011 is history.
So I thought a downgrade raises yields? What gives?
Monopoly money has become a world wide game. In order to keep interest rates close to zero, foreign central banks buy 50% of the bonds auctioned by the US Treasury.
Then I suspect the Federal Reserve does a quid pro quo and buys 50% of the bonds issued by foreign treasuries.
Also, the numbers do not add up. Kinda like Obama’s complaints about S&P. Indirect bidders bought 47.9% and direct bidders bought 11.1%, so who bought the other 41%???
And who would want to buy a 3 year treasury note that yields ½ percent? Why would anyone want to tie up $100,000 for 3 years and only get $500 interest? Could it be the only buyers of these government bonds are the central bankers who simply print some worthless dollars or euros or pounds?
Evryone is so hot for the safety of Treasuries, I wonder is the FED selling some of it’s huge holdings.
Being older they have higher yields and could be sold at a profit I’d think. And the FED will probably need the cash to buy more Treasuries later when they’re not so wanted.
Disclaimer: I know nothing of this market!