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Is The Selloff In Treasuries Overdone?

Thursday, September 5, 2013 - 2:15 PM
Is the Fed going to raise rates? Nope. There is a zero percent chance of that.

Should Fed tapering purchases from $85 billion to $75 billion or $65 billion have that much effect?  

All things being equal, the answer is no. But all things are seldom equal. Rates should not every have gotten as low as they did for as long as they did.

Gross never used the word "bolstered".

He did say "front-end yields become the most reliable bet in the ballpark".

Gross also stated "the result of Minsky’s Big Government and Big Bank policies has always been accelerating inflation at some future time. We recommend longer-dated TIPS as insurance against just such an outcome. "

If the selloff on the long end is over, or nearly over (I don't know, nor does anyone else) then it is long-term treasuries that will be bolstered.

Should rates rise much further, and housing take a huge hit as a result, a genuine buying opportunity in long-term treasuries may present itself.

Read more at Mish's Global Economic Trend Analysis 




MikeMike327 posts since
Feb 22, 2010
Rep Points: 876
1. Thursday, September 5, 2013 - 2:48 PM
The 7-year Treasury Note closed today with a yield of 2.45%. The 7-year CD from Randolph-Brooks Federal Credit Union is yielding 2.17%.  It's been quite a while since Treasury Note yields were higher than CDs of the same maturity.

Just one day later, Friday, 7-year Treasury yield falls 15 bps to 2.323% @ 8:33 a.m.
ShorebreakShorebreak2,675 posts since
Apr 6, 2010
Rep Points: 14,527