#peakoil is catching up with the us govt. Qe3 will not be sustainable because No One wants to buy the USD as BRICS are pushing to trade oil and other energy with a mixed basket of currencies, rather than USD.
So what are US banks doing?
PIMCO's Bill Gross Says to Sell U.S. Treasuries Now
Second, he recently released his market commentary for March where he makes another market call that is probably also worth following. To wit, he predicts that when the Fed’s QE2 bond-buying binge ends at the end of June, there will be nobody to take the Fed’s place as last-resort buyer of U.S. Treasuries at artificially low rates. Treasury yields will need to ramp up sharply by 1.5 percentage points to attract private buyers. Given that the ten-year U.S. Treasury is currently yielding only 3.5%, a 1.5 percentage point jump would equal a 43% increase in interest rates (1.5/3.5). That’s a big move in interest-rate land and would have a significantly negative effect on bond prices.
The Chinese own more than $1 trillion worth of U.S. Treasury bonds. That's a lot of moola at risk for a price decline. I don't envy China at this point in the interest-rate cycle!
No comments:
Post a Comment