Evergreen UST .. has the time come?

[blazespinnaker]

Interesting post in ZeroHedge

http://www.zerohedge.com/article/tre...ution-greenies

Basically UST with no maturity, just pays based off the 2 year.

Those problems are being addressed. The Fed will allow the banks to take this paper on with no reserve requirements. In addition they have agreed to accept this new collateral at the Discount Window with no haircut. This way the banks have guaranteed access to 100% funding for this big buy.

(just kidding ... sort of)

[*T*]

Re: Evergreen UST .. has the time come?

This rumour has been circulating round the internets. It's an interesting idea. The UK has a perpetual war bond with a fixed rate. Since the 2y follows the policy rate, it is a bet on whether or not policy rates are real positive or negative.
It might be an interesting play just prior to the thick of a currency devaluation, if the Fed has to raise rates to defend the dollar. Mind you, a fixed rate bond would be better in that scenario, after any crash.

It's just occurred to me how cash-like this instrument would be -- variable interest rate close to the policy rate, never redeemable -- the Treasury would literally be printing money.

[blazespinnaker]

Re: Evergreen UST .. has the time come?

Yeah, I have to admit, I totally got sucked in and believed the post.