This is crazy – compare Greece and US bonds

This is crazy – compare Greece and US bonds

Greece’s 10-year yields just fell below 1%

Quote: “As Bloomberg’s Lisa Abramowicz reminds, Greece continues to have a junk rating from all three major rating agencies. The current U.S. 10-year Treasury yield is 1.62%.”

One can ask all kinds of questions about ‘why this is so ..?”. My favorite explanation is that US needs to keep rates artificial high to attract buyers given the HUGE treasury funding required due to irrational deficit. If there are no buyers for US Treasuries (and since China, Russia and others have materially reduced their purchases), then what happens to rates, what happens to Treasury’s ability to fund deficit? This is one big can of worms …

Here is another view of similar data analysis – basically stating that the treasury keeps selling debt, and only the big US bank dealers are buying and then they do not have the required liquidity, so the FED helps w/ repo infusions. Another really nasty can of worms until it all gets sorted out, but how?

Quote: “The residual not taken by foreign and non-financial sectors, $249 billion, got backstopped by the domestic financial sector. According to the Bank of International Settlements, that $249 billion in Treasuries went almost entirely to the largest four banks, presumably JPMorgan (JPM), Bank of America (BAC), Citi (C), and Well Fargo (WFC). They had been providing almost all the liquidity for the overnight system, and since Q4 2018, they have been very tight. Whenever they are tight, the whole system is, and the Fed needs to step in.

So that’s where we were at the end of September when this mess really got cooking. We won’t get Q4 numbers on all this until March 12, but the shifts in all this will be dramatic.”

One thought on “This is crazy – compare Greece and US bonds

  1. Morning Brew ( posted on same topic this morning, but failed to compare vs US Treasuries … quote: “Bonds: Greece’s 10-year bond yield dropped below 1% for the first time ever, which is remarkable considering yields were nearly 45% during the financial crisis. Even more remarkable is that Greece’s borrowing rates are some of the highest in the 19-country eurozone. It’s a low interest rate world, we’re just living in it.”

Leave a Reply

Your email address will not be published. Required fields are marked *