random2348

Shorting U.S. Government Risk

apppro,

If confidence returns to the stock market and the credit markets, then Treasuries are likely to sell off. To some degree, shorting Treasuries is a bet that financial markets will normalize and risk aversion will decline. But it is also bet that stands to gain if the U.S. government issues such a massive amount of debt in order to finance the bailouts that the new supply of Treasuries overwhelms the flight-to-safety demand.