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Jeff Gundlach says the S&P warning is good for Treasuries because it will push lawmakers...

Jeff Gundlach says the S&P warning is good for Treasuries because it will push lawmakers into action on fiscal reform. Lower government spending combined with the end of QEII is the recipe for a deflationary environment and thus, lower bond yields.
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Comments (2)
  • zubikov
    , contributor
    Comments (99) | Send Message
     
    Disagreed. The warning will not push lawmakers into action, but rather the downgrade will push lawmakers to scramble in two years. The house and senate are just too stubborn to compromise on the smallest of issues and leave little hope for making big, meaningful concessions. We had an impasse over a $67 mm item on the bill and we're talking trillions in cuts! There are no public sector union compromises, no significant tax reform (can't tax the rich to make up the gap this time), and no concrete timeline to stop all defensive spending.

     

    It's a matter of time before Moody's and Fitch will follow. This will start a cascading effect causing treasuries to fall, hence increasing the cost of further borrowing and decreasing the US ability to pay back even further.
    18 Apr 2011, 01:14 PM Reply Like
  • paulo.pereira
    , contributor
    Comments (492) | Send Message
     
    Rates down, dollar up.

     

    S&P doesn't get it ! The market get it !

     

    The US can always service its debt !
    18 Apr 2011, 01:35 PM Reply Like
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