Notera att nedanstående händer samtidigt som idag Svenska Riksbanks Chefen Stefan Ingves går ut i media med budskapet "Finanaskrisen ligger bakom oss".
Seems the Bond Vigilanties have begun now to dictate some terms. Problem is with higher interest rates it will become much more expensive for US to finance it's defecits and as the private sector likely is way to small in order to be able to finance this magnitude of US debt and as in fact today this US defecit now more or less only is financed via the FED well then it all spells - the dollar is gonna tank. Either of higher interest rates making it virually impossible for the US to support these defecits levels on it own or via a new round of QE, that is printing more dollars out of this air in order to finance the debt by purchasing your own bonds and thus debase your currency.
Anything other than implementing a QEIII will mean President Obama will not be reelected. That's a guarantee.
Again for the state paying interest is like trowing money in the sea.
He ends with a big conclusion:
Investors should view June 30th, 2011 not as political historians view November 11th, 1918 (Armistice Day – a day of reconciliation and healing) but more like June 6th, 1944 (D-Day – a day fraught with hope for victory, but fueled with immediate uncertainty and fear as to what would happen in the short term). Bond yields and stock prices are resting on an artificial foundation of QE II credit that may or may not lead to a successful private market handoff and stability in currency and financial markets. 15% gratuities may lie ahead, but more than likely there is a negative two-bit or even eight-bit tip lying on the investment table. Like I did 45 years ago, PIMCO’s not sticking around to see the waitress’s reaction.
That's not subtle. He thinks bonds will tank when QE II runs out, and so he's running for the hills.
Read more: http://www.businessinsider.com/bill-gross-june-30-2011-will-be-viewed-as-americas-new-d-day-2011-3#ixzz1FXUCc7Rk
Gross Says Treasury Yields Too Low as Fed Approaches End of Asset Buying
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said yields on Treasuries may be too low to sustain demand for U.S. government debt as the Federal Reserve approaches the end of its second round of quantitative easing.
Treasury yields are about 150 basis points too low when viewed on a historical context and when compared with expected nominal gross domestic product growth of 5 percent, Gross wrote in a monthly investment outlook posted today on the Newport Beach, California-based company’s website. The Fed is scheduled to complete purchases of $600 billion of Treasuries in June.
http://www.bloomberg.com/news/2011-03-02/gross-says-treasury-yields-too-low-as-fed-approaches-end-of-asset-buying.html
And these guys the Municipals that can not print their way of of debt are stuck with either getting support from the central Goverment (and they have so far been told that's a no go) even if investors in fact are betting on it (as this market yeat hasen't completely tanked) are now forced to slash spendings. Austerity measures it is called or put it in other words - you pay way more in tax but at the same time you get less or no service..
A consulting firm founded by economist Nouriel Roubini said there could be close to $100 billion of municipal-bond defaults over the next five years as state and local government-debt problems damp the U.S. economic recovery.
That figure would by most estimates represent a significant increase over defaults in recent history, but it doesn't appear to be as dire as a prediction last year by analyst Meredith Whitney.
http://online.wsj.com/article/SB10001424052748703409904576174933066991472.html
And as ECB now today during a press conference indicated possible rate hikes in April, well that then will put further preassure on the FED and the Dollar.
ECB’s Trichet: Rate Hike Possible In April
“An increase of interest rates at the next meeting is possible,” he said, reminding that the Council is never “pre-committed”. So it is not a certain but a possible decision.
http://www.forexlive.com/170846/all/update-ecbs-trichet-rate-hike-possible-in-april
Sedan kan man även hitta "contrarians" till detta scenario om högre räntor.
David Rosenberg: Business Insider Is Right, Rates Will Move Down After QEII Ends
David Rosenberg agrees with the prediction we made this morning, that interest rates will go down -- not up (as Bill Gross thinks) -- when QEII ends this summer.
His reasoning is the same as our. If the end of QEII means the end of asset inflation, that means the appeal of bonds at these levels goes up.
Read more: http://www.businessinsider.com/david-rosenberg-business-insider-is-right-rates-will-move-down-after-qeii-ends-2011-3#ixzz1FbL1gI68
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