PIMCO’s Mohamed El-Erian talks about the May jobs report the global economy and the “fiscal cliff.” Here is a direct link.
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PIMCO’s Mohamed El-Erian talks about the May jobs report the global economy and the “fiscal cliff.” Here is a direct link.
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I`m trying to understand who is buying bonds at these low global rates. It just seems ridiculous 10 years for .5 to 1 % or 2% for thirty years. An investment savings account is paying 1.25% for cash. Are governments buying up their own bonds as some suggest?
I asked myself the same question. Then, this article by Mr. Mauldin opened my eyes. He called it a “cheap call option”. Enjoy.
http://howestreet.com/2012/06/first-deflation-then-inflation-but-the-timing/
JW, Langley BC
Uh, oh.
Our Minister of Finance is back to his old saw:
“Canadians can rest assured that our fiscal and economic fundamentals are solid…”
This is what he kept repeating throughout the crisis. Things must be worse than I thought.
Call it the Flaherty Index or the “FIX”:
To wit: The higher the frequency with which F makes this statement, the higher the risks of a severe downturn.
Well, I know that primary dealers, such as big US banks, are basically obligated to purchase US Treasurys. (Being part of the Federal Reserve System requires them to make a market in US gov debt.) Then the Fed buys/sells them from the PDs in their open market operations in order to massage interest rates. I’ve heard reports that the Fed is the biggest buyer of Treasurys right now.
Probably Larry Fink of Blackstone, Blackrock whatever….remember the jerk that told everyone to get ”100% into equities”???????
Danielle, I think it would be apropriate to put up that chart from the Fink and add the markets trajectory since. Could you please? You were right on the mark with that spear!
According to this article they are buying their own bonds . No one else would be fool enough to lock up their money for 10 years at 1.5%.
http://www.theglobeandmail.com/globe-investor/markets/market-blog/why-t-bills-remain-the-ultimate-haven/article4229717/
Cullen Roche, explains how the U.S. system works against vigilantes because the Fed, the Treasury Department and a select group of U.S. banks (the Primary Dealers) work to insure there is always demand for U.S. Treasuries.
“And so long as the Fed is co-ordinating their actions with the primary dealers (which they do daily) then we shouldn’t expect Treasury bond auctions to fail (these are well co-ordinated events designed NOT TO FAIL),” he writes.
El-Erian sounds like one of the Bloomberg Bimbos calling for more stimulus and more QE and more euro bail-outs – anything to goose the markets – anything. Bunch of yahoos. Time to write down all the bad debt and start over. All of us yahoos that play by the rules, avoid debt, live modestly, save and invest prudently will b e hurt less by the writedowns than by the certain destruction that will come from the currency debasement. The politicians don’t mind screwing all of us to save their precious bankster buddies.