Old Forum topic deserves re-visit: bubble in treasuries

[jficquette]

The Fed is getting the money to buy 30 year bonds to soak up what foreign governments and domestic interests are selling.

This authorization of money to buy these T Bonds will effect transfer the effect of the housing bubble on confidence in the US onto the Fed’s balance sheet.

The Fed will strive to do whatever possible to keep the long term rates down because of its effect on asset prices.

John

[stockstradr]

OK, I’ll take the bait and reply…

I will admit that shorting long-bonds now that yields have climbed up this much, is questionable, risky, and may lose yah your money.

I agree it is just too difficult to predict how the competing forces will play out, what with the Fed threatening to buy down the long end of the curve, vs. the Big Money (corporate and investment banking) dumping the long-bonds and buying the corporate paper…plus eventually the Really Big Money foreign reserves (China, Japan, Oil-producing nations) that have been buying our debt will turn their back (driving up the yields to ridiculous levels)

Plus even if the Fed doesn’t buy down the curve to drive money to corporate paper and mortgages, the Fed may still do same for separate reason to force borrowing through buying treasuries on our behalf and forcing that money down our throats.

Yet, don’t forget Fed has to auction over two trillion this year, so one could argue the money required to buy down the yield against that massive auction would compromise the Fed’s balance sheet (beyond the ridiculous levels of money printing already reached)

I’m on the side now. I am of opinion that this recession/depression will eventually give us really low yields at auction again, and THAT will then be another good opportunity to go short again.

[stockstradr]

OK, I’ll take the bait and reply…

I will admit that shorting long-bonds now that yields have climbed up this much, is questionable, risky, and may lose yah your money.

I agree it is just too difficult to predict how the competing forces will play out, what with the Fed threatening to buy down the long end of the curve, vs. the Big Money (corporate and investment banking) dumping the long-bonds and buying the corporate paper…plus eventually the Really Big Money foreign reserves (China, Japan, Oil-producing nations) that have been buying our debt will turn their back (driving up the yields to ridiculous levels)

Plus even if the Fed doesn’t buy down the curve to drive money to corporate paper and mortgages, the Fed may still do same for separate reason to force borrowing through buying treasuries on our behalf and forcing that money down our throats.

Yet, don’t forget Fed has to auction over two trillion this year, so one could argue the money required to buy down the yield against that massive auction would compromise the Fed’s balance sheet (beyond the ridiculous levels of money printing already reached)

I’m on the side now. I am of opinion that this recession/depression will eventually give us really low yields at auction again, and THAT will then be another good opportunity to go short again.

[stockstradr]

OK, I’ll take the bait and reply…

I will admit that shorting long-bonds now that yields have climbed up this much, is questionable, risky, and may lose yah your money.

I agree it is just too difficult to predict how the competing forces will play out, what with the Fed threatening to buy down the long end of the curve, vs. the Big Money (corporate and investment banking) dumping the long-bonds and buying the corporate paper…plus eventually the Really Big Money foreign reserves (China, Japan, Oil-producing nations) that have been buying our debt will turn their back (driving up the yields to ridiculous levels)

Plus even if the Fed doesn’t buy down the curve to drive money to corporate paper and mortgages, the Fed may still do same for separate reason to force borrowing through buying treasuries on our behalf and forcing that money down our throats.

Yet, don’t forget Fed has to auction over two trillion this year, so one could argue the money required to buy down the yield against that massive auction would compromise the Fed’s balance sheet (beyond the ridiculous levels of money printing already reached)

I’m on the side now. I am of opinion that this recession/depression will eventually give us really low yields at auction again, and THAT will then be another good opportunity to go short again.

[stockstradr]

OK, I’ll take the bait and reply…

I will admit that shorting long-bonds now that yields have climbed up this much, is questionable, risky, and may lose yah your money.

I agree it is just too difficult to predict how the competing forces will play out, what with the Fed threatening to buy down the long end of the curve, vs. the Big Money (corporate and investment banking) dumping the long-bonds and buying the corporate paper…plus eventually the Really Big Money foreign reserves (China, Japan, Oil-producing nations) that have been buying our debt will turn their back (driving up the yields to ridiculous levels)

Plus even if the Fed doesn’t buy down the curve to drive money to corporate paper and mortgages, the Fed may still do same for separate reason to force borrowing through buying treasuries on our behalf and forcing that money down our throats.

Yet, don’t forget Fed has to auction over two trillion this year, so one could argue the money required to buy down the yield against that massive auction would compromise the Fed’s balance sheet (beyond the ridiculous levels of money printing already reached)

I’m on the side now. I am of opinion that this recession/depression will eventually give us really low yields at auction again, and THAT will then be another good opportunity to go short again.

[stockstradr]

OK, I’ll take the bait and reply…

I will admit that shorting long-bonds now that yields have climbed up this much, is questionable, risky, and may lose yah your money.

I agree it is just too difficult to predict how the competing forces will play out, what with the Fed threatening to buy down the long end of the curve, vs. the Big Money (corporate and investment banking) dumping the long-bonds and buying the corporate paper…plus eventually the Really Big Money foreign reserves (China, Japan, Oil-producing nations) that have been buying our debt will turn their back (driving up the yields to ridiculous levels)

Plus even if the Fed doesn’t buy down the curve to drive money to corporate paper and mortgages, the Fed may still do same for separate reason to force borrowing through buying treasuries on our behalf and forcing that money down our throats.

Yet, don’t forget Fed has to auction over two trillion this year, so one could argue the money required to buy down the yield against that massive auction would compromise the Fed’s balance sheet (beyond the ridiculous levels of money printing already reached)

I’m on the side now. I am of opinion that this recession/depression will eventually give us really low yields at auction again, and THAT will then be another good opportunity to go short again.

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