Trouble at the Treasury Auction

[Arraya]

[quote=afx114]Couldn’t this be a function of the stock market’s increase since mid-March?

Stocks up = bonds down
Stocks down = bonds up[/quote]

It’s not quite that simple and I can’t quite wrap my head around the whole process, but here it goes. You have foreign and internal purchasers of treasuries. Traditionally, they have been considered the safest place to park you money in times of uncertainty. Last fall when stocks tanked there was a huge internal flight to safety where domestic money flowed into treasuries. Concurrently, foreign purchasers have been decreasing there purchases. I actually ready somewhere that we used to have 16 and it is not down to 6 foreign buyers. So, basically domestic demand made up for foreign. Now that the domestic buyers are more risk tolerant they are going back into equities. The problem is foreign buyers are still decreasing there holdings including China which is our biggest holder. This is happening when we have a huge budget deficit because of the stimulus and other increased spending which means we need to sell more to keep the party going.

[davelj]

[quote=CA renter]
But in the 70s and 80s, there was wage inflation, and the Baby Boomers were in their peak buying years. They were also more likely to have more stable jobs and healthcare/pension plans.

People today have to factor in job instability (making it less likely they can “hold on” through a downturn) and the increased need for savings for retirement and health problems.

I’m not sure we’re seeing any wage inflation in the near term, or do you think I’m missing something?

Also, if rates weren’t important, why is the govt willing to destroy our currency in order to get interest rates down to “save the housing market”?
[/quote]

I never said rates weren’t important right now, which is why I said, “Don’t get me wrong, I think it’s important to have sub-6% mortgage rates for the next 12-18 months as we clear out most of the foreclosure detritus…” So, again, I think rates are important right now because the market is in disequilibrium and the way to help correct that is through low rates. But a couple of years down the road when most of the “must sell” inventory is cleared out, rates won’t matter as much. Not irrelevant, mind you, but just not as important. But that’s a ways off judging by all the inventory out there.

Where wage inflation is concerned, I’m not seeing it either. Right now. But I assume that we’re going to see some positive inflation a few years down the road – wages, rents, etc. If we don’t, then rates aren’t going to climb that much… and it won’t be an issue where buying a house is concerned.

[davelj]

[quote=CA renter]
But in the 70s and 80s, there was wage inflation, and the Baby Boomers were in their peak buying years. They were also more likely to have more stable jobs and healthcare/pension plans.

People today have to factor in job instability (making it less likely they can “hold on” through a downturn) and the increased need for savings for retirement and health problems.

I’m not sure we’re seeing any wage inflation in the near term, or do you think I’m missing something?

Also, if rates weren’t important, why is the govt willing to destroy our currency in order to get interest rates down to “save the housing market”?
[/quote]

I never said rates weren’t important right now, which is why I said, “Don’t get me wrong, I think it’s important to have sub-6% mortgage rates for the next 12-18 months as we clear out most of the foreclosure detritus…” So, again, I think rates are important right now because the market is in disequilibrium and the way to help correct that is through low rates. But a couple of years down the road when most of the “must sell” inventory is cleared out, rates won’t matter as much. Not irrelevant, mind you, but just not as important. But that’s a ways off judging by all the inventory out there.

Where wage inflation is concerned, I’m not seeing it either. Right now. But I assume that we’re going to see some positive inflation a few years down the road – wages, rents, etc. If we don’t, then rates aren’t going to climb that much… and it won’t be an issue where buying a house is concerned.

[davelj]

[quote=CA renter]
But in the 70s and 80s, there was wage inflation, and the Baby Boomers were in their peak buying years. They were also more likely to have more stable jobs and healthcare/pension plans.

People today have to factor in job instability (making it less likely they can “hold on” through a downturn) and the increased need for savings for retirement and health problems.

I’m not sure we’re seeing any wage inflation in the near term, or do you think I’m missing something?

Also, if rates weren’t important, why is the govt willing to destroy our currency in order to get interest rates down to “save the housing market”?
[/quote]

I never said rates weren’t important right now, which is why I said, “Don’t get me wrong, I think it’s important to have sub-6% mortgage rates for the next 12-18 months as we clear out most of the foreclosure detritus…” So, again, I think rates are important right now because the market is in disequilibrium and the way to help correct that is through low rates. But a couple of years down the road when most of the “must sell” inventory is cleared out, rates won’t matter as much. Not irrelevant, mind you, but just not as important. But that’s a ways off judging by all the inventory out there.

Where wage inflation is concerned, I’m not seeing it either. Right now. But I assume that we’re going to see some positive inflation a few years down the road – wages, rents, etc. If we don’t, then rates aren’t going to climb that much… and it won’t be an issue where buying a house is concerned.

[davelj]

[quote=CA renter]
But in the 70s and 80s, there was wage inflation, and the Baby Boomers were in their peak buying years. They were also more likely to have more stable jobs and healthcare/pension plans.

People today have to factor in job instability (making it less likely they can “hold on” through a downturn) and the increased need for savings for retirement and health problems.

I’m not sure we’re seeing any wage inflation in the near term, or do you think I’m missing something?

Also, if rates weren’t important, why is the govt willing to destroy our currency in order to get interest rates down to “save the housing market”?
[/quote]

I never said rates weren’t important right now, which is why I said, “Don’t get me wrong, I think it’s important to have sub-6% mortgage rates for the next 12-18 months as we clear out most of the foreclosure detritus…” So, again, I think rates are important right now because the market is in disequilibrium and the way to help correct that is through low rates. But a couple of years down the road when most of the “must sell” inventory is cleared out, rates won’t matter as much. Not irrelevant, mind you, but just not as important. But that’s a ways off judging by all the inventory out there.

Where wage inflation is concerned, I’m not seeing it either. Right now. But I assume that we’re going to see some positive inflation a few years down the road – wages, rents, etc. If we don’t, then rates aren’t going to climb that much… and it won’t be an issue where buying a house is concerned.

[davelj]

[quote=CA renter]
But in the 70s and 80s, there was wage inflation, and the Baby Boomers were in their peak buying years. They were also more likely to have more stable jobs and healthcare/pension plans.

People today have to factor in job instability (making it less likely they can “hold on” through a downturn) and the increased need for savings for retirement and health problems.

I’m not sure we’re seeing any wage inflation in the near term, or do you think I’m missing something?

Also, if rates weren’t important, why is the govt willing to destroy our currency in order to get interest rates down to “save the housing market”?
[/quote]

I never said rates weren’t important right now, which is why I said, “Don’t get me wrong, I think it’s important to have sub-6% mortgage rates for the next 12-18 months as we clear out most of the foreclosure detritus…” So, again, I think rates are important right now because the market is in disequilibrium and the way to help correct that is through low rates. But a couple of years down the road when most of the “must sell” inventory is cleared out, rates won’t matter as much. Not irrelevant, mind you, but just not as important. But that’s a ways off judging by all the inventory out there.

Where wage inflation is concerned, I’m not seeing it either. Right now. But I assume that we’re going to see some positive inflation a few years down the road – wages, rents, etc. If we don’t, then rates aren’t going to climb that much… and it won’t be an issue where buying a house is concerned.

[NeetaT]

If the greedy idiots would make the 30yr notes tax free, they may not have a problem.

[NeetaT]

If the greedy idiots would make the 30yr notes tax free, they may not have a problem.

[NeetaT]

If the greedy idiots would make the 30yr notes tax free, they may not have a problem.

[NeetaT]

If the greedy idiots would make the 30yr notes tax free, they may not have a problem.

[NeetaT]

If the greedy idiots would make the 30yr notes tax free, they may not have a problem.

[SD Realtor]

One thing that I was wondering and perhaps you guys in the industry can educate me about… Aren’t some of the domestic purchases made by the dealers who basically can get that money from the FED to make those bond purchases?

[SD Realtor]

One thing that I was wondering and perhaps you guys in the industry can educate me about… Aren’t some of the domestic purchases made by the dealers who basically can get that money from the FED to make those bond purchases?

[SD Realtor]

One thing that I was wondering and perhaps you guys in the industry can educate me about… Aren’t some of the domestic purchases made by the dealers who basically can get that money from the FED to make those bond purchases?

[SD Realtor]

One thing that I was wondering and perhaps you guys in the industry can educate me about… Aren’t some of the domestic purchases made by the dealers who basically can get that money from the FED to make those bond purchases?

[Author]

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