[quote=moneymaker]I agree that the Fed “wants” to continue the stimulus, however we are not in a vacuum here in the US. When safety and yields start increasing elsewhere will there be a choice. I think I heard US treasuries are being sold by some holding them, when that happens on a large scale, seems to me that it will be harder for the US to sell without raising yields. The government seems to be in a credit bubble.[/quote]
I don’t know about the credit bubble part. But the rest of it is exactly what is happening today. Treasuries are being sold, yield is going up. It’s not a safety thing, its a yield thing. The Fed has been the primary buyer in the bond market for a long time. There have been days when they were the only buyer.
But so long as we continue to have a large trade deficit, foreign central banks will have few options but to buy our paper. Today, they’re buying dollars.
