Korean Job Discussion Forums

[bacasper]

[mises]

[Pluto]

Why can't we get this guy on CNBC or FBN?

Check this out. (Mises, you'll like this one)

He certainly beats your run of the mill SIFP.

[mises]

[ontheway]

from ^ ^ ...

[Cordova]

Treasuries Tumble After Auction, Russian Threat to Cut Holdings

http://www.bloomberg.com/apps/news?pid=20601103&sid=aTYL6r.iI9wU

By Daniel Kruger and Dakin Campbell

June 10 (Bloomberg) -- Treasuries fell, pushing 10-year yields to the highest level since October, as the government sold $19 billion of the securities and Russia said it may switch some reserves from U.S. debt.

The notes drew a yield of 3.99 percent at the sale, the highest since August 2008. The offering was the second of three sales this week that will raise $65 billion, part of the U.S.�s record borrowing program. A Russian central bank official said the nation may buy International Monetary Fund bonds.

�There are an awful lot of Treasuries being auctioned and there�s going to be more and more and more and more,� said Jay Mueller, who manages about $3 billion of bonds at Wells Fargo Capital Management in Milwaukee.

The yield on the 10-year note rose nine basis points, or 0.09 percentage point, to 3.95 percent at 4:50 p.m. in New York, according to BGCantor Market Data. It earlier reached 3.99 percent, the highest since Oct. 16. The 3.125 percent security maturing in May 2019 declined 23/32, or $7.19 per $1,000 face amount, to 93 10/32.

�Four percent�s going to be seen as a very good entry point,� said George Goncalves, chief fixed-income rates strategist at Cantor Fitzgerald LP, one of 16 primary dealers that trade with the Federal Reserve. �It�s proving to be a good spot to draw out value players.�

The 30-year bond yield touched 4.8327 percent, the highest since Oct. 17, 2007. The government is scheduled to sell $11 billion of the securities tomorrow.

�Clearly Disappointing�

Seven bond-trading firms surveyed by Bloomberg News had forecast a yield of 3.975 percent. The sale is a reopening of the record $22 billion 10-year note sale on May 6, which drew a yield of 3.19 percent.

�The auction was clearly disappointing,� said Ira Jersey, head of U.S. interest-rate strategy at RBC Capital Markets in New York, the investment-banking arm of Canada�s biggest lender. �These results don�t bode well for the bond auction tomorrow.�

The bid-to-cover ratio, which gauges demand by comparing the number of bids with the amount of securities sold, was 2.62. It was 2.47 last month and has averaged 2.40 at the past 10 scheduled sales.

Indirect bidders, the class of investors that includes foreign central banks, bought 34.2 percent of the notes, up from 31.9 percent in May. The average at the past 10 scheduled auctions is 25.8 percent.

Russia Switch

Russia�s central bank may switch some of its reserves from Treasuries to International Monetary Fund bonds, the bank�s first deputy chairman, Alexei Ulyukayev, said in Moscow today. His comments were confirmed by a bank official who declined to be named, citing bank policy.

Finance Minister Alexei Kudrin said last month Russia will buy $10 billion of IMF bonds. China is �actively� considering buying as much as $50 billion of the IMF bonds, the State Administration of Foreign Exchange said last week. Brazil�s Finance Minister Guido Mantega said today his country will purchase $10 billion of debt sold by the IMF.

Russia holds $138.4 billion of U.S. debt. China is the largest U.S. creditor, with $767.9 billion. The U.S. government must rely on foreign investors to sustain record borrowing.

The dollar rose against the euro as the yield advantage of 10-year Treasury notes over comparable-maturity German bunds increased to the widest level since October 2007, making the U.S. assets more attractive. The greenback fell earlier as Russia�s announcement added to speculation central banks around the world may try to diversify their reserves away from the U.S. currency.

Foreign Bidding

While leaders of the nations of Brazil, Russia, India and China talk about substituting the dollar, the so-called BRIC countries have increased foreign reserves at the fastest pace since September. The nations added more than $60 billion in foreign reserves in May to limit currency gains, data compiled by central banks and strategists show.

Many of those reserves are still being plowed into U.S. debt securities, according to data from the Fed. Its holdings of Treasuries on behalf of central banks and institutions from China to Norway rose by $68.8 billion, or 3.7 percent, in May, the third most on record, data compiled by Bloomberg show.

The Treasury said bidding from foreigners was above average at its $35 billion three-year note auction yesterday. The sale drew bids for 2.82 times the amount of debt available, rising from 2.66 in May. Investors bought the notes after yields rose more than 50 basis points in less than a week.

Longer maturities are leading losses in the Treasury market in 2009, indicating investors are demanding more yield because of the threat inflation will quicken in coming years.

Trillions

Thirty-year bonds handed investors a 28 percent loss this year, versus 11 percent for 10-year notes and 0.4 percent for two-year securities, according to indexes compiled by Merrill Lynch & Co. Treasuries of all maturities have fallen 6.2 percent this year, according to Merrill indexes. The securities haven�t posted an annual decline since 1998, according to the index.

The U.S. budget deficit climbed to $189.7 billion in May, a record for the month, compared to $165.9 billion a year earlier, the Treasury said today in Washington.

President Barack Obama may borrow $3.25 trillion in the fiscal year ending Sept. 30, almost four times the $892 billion in 2008, according to primary dealer Goldman Sachs Group Inc. The budget deficit is projected to increase to $1.85 trillion in the year ending Sept. 30, equivalent to 13 percent of the nation�s economy, according to the nonpartisan Congressional Budget Office.

All told, the government and the central bank have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.

Loss of Faith

The Fed�s $3.5 billion purchase today of Treasuries maturing between August 2019 and February 2026 brings to $156.528 billion the amount purchased since the $300 billion, six-month program was announced on March 18.

Ten-year yields have risen over 141 basis points since then, complicating the central bank�s mission to lower consumer borrowing costs. Thirty-year fixed-rate mortgages jumped to 5.56 percent from as low as 4.85 percent in April, according to Bankrate.com in North Palm Beach, Florida. Costs for homebuyers are now higher than in December.

�I think the market�s lost faith in the ability of the Fed to control interest rates here,� said Gary Pollack, who helps oversee $12 billion as head of fixed-income trading at Deutsche Bank AG�s Private Wealth Management unit in New York.

Signs of Moderating

The Fed said the U.S. downturn may be slowing in almost half of its regions, while �stringent� loan conditions and a �weak� labor market persist.

�Economic conditions remained weak or deteriorated further� from mid-April through May, while five of 12 Fed districts �noted that the downward trend is showing signs of moderating,� the Fed said today in its Beige Book business survey, published two weeks before officials issue their next monetary policy decision.

The difference between rates on 10-year notes and Treasury Inflation Protected Securities, which reflects the outlook among traders for consumer prices, was 2.09 percentage points, a nine- month high.

To contact the reporters on this story: Daniel Kruger

[RJjr]

Even the short term rates are going up.

Our debt is just going to crush us and there's nothing any Republican or Democrat can do about it.

To sum it all up: It's all over but the crying.

[bacasper]

I'm guessing that IMF bonds are better than Treasuries (how can they not be?) but just how much better are they?

[mises]

[mises]

http://zerohedge.blogspot.com/2009/06/corporate-leverage-peaks-at.html

[mises]

http://www.bloomberg.com/apps/news?pid=20601087&sid=aqLNecbH0dcg

[visitorq]

"Purchases of U.S. Treasuries will continue"

[mises]

An article discussing the 'shadow inventory' of homes for sale (banks not listing homes on their books to keep the illusion of a recovering housing market) has this money quote:

[JongnoGuru]

The Lovely Bubble Years.

Real Estate Debt Can Make You Rich: What You Owe Today Is What You Will Be Worth Tomorrow!!!

2006


wonder if they'll put out a 2nd edition.

[mises]

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