Crocodilian

More Debt, Less Filling

@Bearfund
"1. When and whether foreign central banks start dumping Treasuries, or stop buying them, is largely unknowable."

True. If they stopped buying Treasuries, what would they buy? What would the effect on their own currencies and economies be of such a decision?

"2. When and whether there is an economic recovery in the US is likewise unknowable."

Also true. However, a review of US economic history would suggest that there will be a recovery. I'm not aware of a situation in world history where a civilization simply went into economic decline and failed, without war or pestilence. To the extent that we're presently "at war"-- its a war of choice, and we can decide to end it.

"4. Supply will remain extremely elevated across the curve for at least the next two years."

Supply of Treasuries will remain elevated-- however, aggregate supply of debt will remain constant, or perhaps even fall. At the point that private entities can issue their own debt, supplies of Treasuries will fall.

@daniel3582
"I think we are going to see that money (in some part) flood into commodities later this year, particularly oil."

Well, you have a lot of company in that belief. The oil market itself "says" that, with pricing in contango (futures priced higher than the spot, the opposite of what's normal for oil . . . priced so much higher that people are parking tankers full of oil to wait for higher prices).

However: if you believe that oil will rise, implicit in that belief is an economic recovery (or supply destruction, but that operates over a longer timeframe). Given the oil consumption/stockpile numbers, its hard to see how oil can go up in the 12-18 month timeframe without an increase in consumption, which equates to an increase in economic activity.