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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: gregor_us who wrote (19869)12/29/2004 11:01:46 PM
From: mishedlo  Read Replies (1) of 116555
 
Where I find Heinz a tad lacking, however, is that while he makes a beautiful case for where the US bond market stands today--and what may happen in a economic downturn here in the US--he has been more sparing with his analysis of how the US T-Bond market is hugely propped-up. Surely even the reasonable man concludes the US T-Bond market is artificial now, and has been stripped of its historical role to forecast well the future.

Propped up by what?
Foreign buying?
So what?
Did the world end today when they bought fewer treasuries today?
There is ENORMOUS pent up demand for treasuries in my view of things, in Heinz's view of things, and in the view of both Brian Reynolds and John Succo on Minyanville.

Never was an asset class so universally hated as treasuries.
Brian Reynolds thinks that foreign support has added 15 bps to treasuries. Big deal, for all that holding. If stocks start plunging and housing starts plunging, 4% on treasuries will start looking pretty damn good, not to foreigners perhaps, but to those here.

Heinz has acknowledged to me the possibility that a US$ blowup or some sort of panic results in a mammoth selling of treasuries, but has that risk very low for now. Both of us see that as a possible endgame quite some time from now (as in not next year). I will clarify this but I think I am not misstating his position.

Mish
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