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  • The Great U.S. Ponzi Scheme: Sell U.S. Treasury Bonds [View article]
    Sorry for a typo in my original post. I meant that treasury yields are all set to rise and prices will go down. Also if the fed is buying US treasury bonds at these yields especially the ones with longer maturities, I can't think of any practical scenario in which it will ultimately make money. basically it's a guaranteed loss on Fed's balance sheet except in one scenario, where US economy outperforms rest of the world by at least a multiple of 2-3. Meaning if rest of world grows at say 4% and US grows at 10-12%. Which is a highly unlikely scenario.

    On Mar 19 05:51 PM econjunkie wrote:

    > Treasury yields and bond prices are inversely related. If bonds are
    > downgraded and sold off, that will reduce the price and increase
    > the yield of the bonds, and if it was international money that was
    > initially involved, one would expect an escape from the U.S. dollar
    > to push it down.
    > I would sooner argue that the relative value of the U.S. dollar is
    > positively correlated with gov't bond prices, and therefore negatively
    > with bond yields, though I haven't regressed the dollar on these
    > variables. You are suggesting the opposite sign.
    Mar 19, 2009. 08:28 PM | 1 Like Like |Link to Comment
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