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Are you shorting US Treasuries just yet? Part II | Advantage Research

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You probably already know, but to reaffirm, US treasuries are quite bullish now leaving only long hands PIMCo and a few others in the fray with their threat to short. Especially as the dollar forecast for the June July months is down 10% from the current 1.42 levels to the Euro. So, tread carefully as this is the situation even when the QE2 cancellation is well-known and $40 billion being  raised by Central Banks in Europe with rates above 5% for most of it (Spain)

Those standing on the shorting would now have to wait on hand till the chickens come to roost and Commodity cycle starts another huge uptick ( which could last for a quarter or two without deflating treasuries) and the hyperinflation fears start looking serious. In sum, Fed has put enough new dollars in the system to avoid any possibility of buying dollars from the market even if no new Treasury buying is done by the Fed, leaving it quite comfortable wi

3 comments on “Are you shorting US Treasuries just yet? Part II | Advantage Research

  1. Derrick Vanguilder
    June 15, 2011

    Thank you for bothering to line this all out for people like us. This particular posting was quite helpful in my opinion.


  2. Pete
    October 24, 2011

    According to Zero Hedge, countries outside of the U.S. dumped 74 billion dollars in U.S. Treasuries, most of it over the weekend:

    “Over the weekend, we observed the perplexing sell off of $56 billion in US Treasurys courtesy of weekly disclosure in the Fed’s custodial account (source: H.4.1) and speculated if this may be due to an asset rotation, under duress or otherwise, out of bonds and into stocks, to prevent the collapse of the global ponzi (because when the BRICs tell the IMF to boost its bailout capacity you know it is global). We also proposed a far simpler theory: “the dreaded D-day in which foreign official and private investors finally start offloading their $2.7 trillion in Treasurys with impunity (although not with the element of surprise – China has made it abundantly clear it will sell its Treasury holdings, the only question is when), has finally arrived.” In hindsight the Occam’s Razor should have been applied. Little did we know 5 short days ago just how violent the reaction by China would be (both post and pre-facto) to the Senate decision to propose a law for all out trade warfare with China. Now we know – in the week ended October 12, a further $17.7 billion was “removed” from the Fed’s custodial Treasury account, meaning that someone, somewhere is very displeased with US paper, and, far more importantly, what it represents, and wants to make their displeasure heard loud and clear. (Source)

    Undoubtedly, the Chinese and other countries have recently discovered that Italy and Greece, with smaller debt to income ratios than the United States, are less riskier and carry a higher rate of return. This is because, unlike the US, the Rothschild/Rockefeller bond rating agencies have trashed their country’s debt ratings, forcing them to pay a much higher interest rate than U.S. Treasuries. Hey, if you take the risk, you might as well earn the reward!


    • zyakaira
      October 25, 2011

      Treasury holds more than half of its US debt holdings for foreign owners Foreigners thus would no thave a material impact or dumping with sales of $100 bln magnitude probably to create liquidity. China only holds 2-3% of new EZ debt


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