Reuters (UK):Treasuries bond "bubble" slowly bursting

Discussion in 'Economics' started by MachM1, Jan 27, 2009.

  1. MachM1


    NEW YORK (Reuters) - The Treasury bond "bubble" looks like it's leaking air.

    Over the last three weeks, investors have been selling U.S. Treasury bonds heavily, giving the 30-year Treasury bond's yield this week its biggest weekly jump since 2001, shortly after the September 11 attacks on the United States.

    The proximate cause for the selling in Treasuries stems from expectations that the government will need to borrow about $2 trillion of debt this year to finance its rescue packages for the battered banking sector. Already, outstanding Treasury debt stood at $5.5 trillion at the end of September.

    With this in mind, investors are fleeing Treasuries. In fact, while the Dow Jones industrial average .DJI is down 7.5 percent so far this year, the 30-year Treasury bond is down even more at 10 percent. This is contrary to the usual dynamic, where Treasuries move in the opposite direction of stocks.

  2. Where is all the money flowing? It isn't going into equities.
  3. MachM1


    Too bad there is $1,400 Trillion of wealth left to evaporate and will probably only be about $200 Trillion at current values left when all is said and done.

    The deflationary credit contraction begins
  4. It's probably flowing to bonds, which isn't all that bad. Eventually, when it's too late, they will flow back to equities. What do you expect?