Geithner : Rise in T-Bond yields “is a sign that things are improving"

Discussion in 'Economics' started by ASusilovic, May 21, 2009.

  1. May 21 (Bloomberg) -- Treasury Secretary Timothy Geithner, asked about concerns over the U.S. government’s creditworthiness, said the Obama administration is committed to reducing its budget deficit.

    “It’s very important that this Congress and this president put in place policies that will bring those deficits down to a sustainable level over the medium term,” he said, adding that the target is at least 3 percent of gross domestic product. “That is critically important.”

    The dollar, Treasuries and American stocks slumped today on concern about the U.S. government’s debt rating. Bill Gross, the co-chief investment officer of Pacific Investment Management Co., said today the U.S. “eventually” will lose its AAA grade.

    In an interview with Bloomberg Television, Geithner also said that a rise in Treasury bond yields “is a sign that things are improving” and that “there is a little less acute concern about the depth of the recession.”

    The Treasury chief said it’s still “possible” that the unemployment rate may reach 10 percent or higher, cautioning that the economic recovery is still in the “early stages.”

    “The important thing to recognize is that growth will stabilize and start to increase first before unemployment peaks and starts to come down,” he said. “These early signs of stability are very important” although “this is still a very challenging period for businesses and families across the United States.”

    I will send Mr. Geithner this book here :

  2. This of course means buy the dollar and short stocks.
  3. Maybe in long term (more than 6months), but short term (today),dollar was wasted, so did the stock market.
  4. The fed is deliberately trying to kick people out of treasuries with their quantitative easing and Zero interest rate policy. They want people to flee cash and go into risky assets. The only way the fed knows to do this is to create inflation.

    So, when Geit. says this, he is correct in that people are fleeing treasuries and moving into other assets. The problem is that this policy is wrong to fix the economy. It is boosting all assets within the financial markets, but the real economy is still hurting. If there's no demand for products, higher prices will only slow the economy more.
  5. I totally agree with you and thats why i think its a huge crap shoot and setting us up for another mega collapse. Not to mention I hate Bernanke, geitner, summers and hope the shit plan they put forth collapses and they get kicked out.
  6. Actually this means few banks have money to buy even T-Bonds.