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Treasury Bubble?

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March 06, 2008 – Comments (4)

MarketBeat on WSJ has a mention of how people are talking about a treasury bubble.  The article then goes on to talk about short term treasuries.

It is nonsense to use a term "bubble" for short term treasury bills.  When the yield is below the book rate, sure they've been bid up, but with a short timeline they simply can't be bid up much.  People are there for safety reasons.  They'd much rather risk losing 1 or 2% because the short term treasuries got bid then risk being in a place where you see huge drops.

I would suggest that long term treasuries are bubbled and should there be a an interest rate correction upwards the decline in face value will be huge.  I can't see with the level of debt and gross uncertainty of the financial system leaving people with much of an appetite to buy more long term bonds at the pathetic rates being offered.  

The data out suggests foreign investors are already backing off and that will be a big problem. 

 

4 Comments – Post Your Own

#1) On March 06, 2008 at 6:41 PM, dwot (72.07) wrote:

Another eeekkkk--- I see the USD is down some more, 72.87...  Eeeekkkkk....

When I was saying I expected oil to go down, it was about 76, so that's about a 4.3% loss on the currency.  Oil is $105.28.  It isn't up so much in other currencies...

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#2) On March 06, 2008 at 7:21 PM, ATWDLimited (< 20) wrote:

Dollar collapse ahead, time about the next 5 years. Prepare to wean yourself off the dollar and from that over-debted government teat.

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#3) On March 07, 2008 at 6:50 AM, dwot (72.07) wrote:

72.68 today... Down about 4.6% now...  Oil $105 exactly.  Nikkei still diving, down 432 overnight...

Can't say I didn't see most of this coming.  Oil $105 is the only one I don't get, but time will tell if I am wrong or just early. 

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#4) On January 03, 2009 at 12:48 PM, smelton87 (< 20) wrote:

This might be of interest...

http://experienceiseverything.blogspot.com/2009/01/death-of-dollar-1309.html 

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