[quote=bubba99]OK genius, why might it be right for the wrong reasons? [/quote]
As I said, you may end up being right. But not for the reason you purport. That’s self-explanatory. I might predict the right outcome for every football game this weekend. But it won’t be because I’m some football guru – it will be due to blind luck.
[quote=bubba99]
Here is an article from blumberg about bank treasury purchases – more than nothing
Aside from the fact that the article is almost a year old, did you bother to actually read it? Here’s the money quote:
“Even after banks including Bank of America Corp. and Capital One Financial Corp. increased such investments 26 percent to $125 billion in the 12 months through June, they have only about 1 percent of their assets in Treasuries, Fed data show. That’s down from the 8.5 percent average for the year after the past five recessions. Banks would have to buy $1 trillion more to reach past levels, so demand ‘could remain quite high for some time,’ Barclays Plc said.”
Yes, banks have for the last year been buying SHORT-TERM treasuries, which they – no, make that no one – needs to dump. There’s very little duration – and thus interest-rate risk – in holding short-term treasuries.
[quote=bubba99]
Here is another an interesting article about the banks being the first wave in the calapse of the Treasury market.
At least I am not alone in “my lack of understanding of the subject”
The applicable text being “So the TBTF banks, on seeing this run on Treasuries, will add to the panic by acting in their own best interests: They will be among the first to step off Treasuries. They will be the bleeding edge of the wave. Here the panic phase of the event begins: Asset managers—on seeing this massive Fed buy of Treasuries, and the American Zombies selling Treasuries, all of this happening within days of a largish Treasury auction—will dump their own Treasuries en masse.”[/quote]
You’re right. You’re not alone. You AND this “Writer, Filmmaker” don’t understand the relationship between the Fed, the TBTF banks and treasuries.
If FOREIGNERS start selling long-term US Treasuries (or not buying them “when issued”), THEN we have a problem. The same applies to other LARGE buyers of LONG-TERM Treasuries. But banks don’t hold much in the way of Treasuries (and, again, what they do hold are short-term) in the whole scheme of things as the graph in my prior post makes abundantly clear. You’re chasing a red herring. Because, like your “Writer, Filmmaker” friend above, you don’t know any better.
