FT's Gillian Tett on the repression in Bonds

[DRumsfeld2000]

An excellent article by Gillian Tett:-

http://www.ft.com/cms/s/0/58078892-9...#axzz1uRhqBkmp

[Polish_Silver]

Re: FT's Gillian Tett on the repression in Bonds

When is her issue coming out?

[dcarrigg]

Re: FT's Gillian Tett on the repression in Bonds

An excellent article by Gillian Tett:-

http://www.ft.com/cms/s/0/58078892-9...#axzz1uRhqBkmp

Use this link to see the article without the annoying popup.

[lektrode]

Re: FT's Gillian Tett on the repression in Bonds

Use this link to see the article without the annoying popup.

boy... damn! dc, is she hot, or wot? (guess eye never saw her face before)
and SMART too:

....the word “repression” is being bandied about at investor conferences across the western world. No wonder. In the eurozone, there are growing signs that governments in places such as Spain and Ireland are “encouraging” – if not forcing – banks and state pension funds to buy public sector bonds, at potentially unfavourable prices.

Meanwhile, in America something just as remarkable is under way: investors are gobbling up government debt at unfavourable rates without needing to be “repressed” at all. This week, demand for 10-year Treasuries was so high – as fears exploded about the eurozone – that the US government sold debt with a record low coupon of 1.75 per cent. And while the nominal yields on 10-year Treasuries, of about 1.91 per cent, are above last year’s lows, in real terms they are in negative territory, given inflation over 2.5 per cent.


Anybody buying Treasuries, in other words, is essentially agreeing to subsidise the US government in coming years – unless you believe that deep deflation looms. Call it, if you like, a form of “voluntary” repression; either way, it will almost certainly end up helping the US state, to the detriment of investors.

So can it continue?

"in coming years" ??
jeeeze louise - and there i was thinking that we've been "subsidizing" the US gov since unkle ben fired up the helicopters... (and dropped the rates on our savings accts to 1/2 of 1%)

but yeah, thats the BIG burning question: can it continue.

[doom&gloom]

Re: FT's Gillian Tett on the repression in Bonds

Beauty and brains all in one package!

[skidder]

Re: FT's Gillian Tett on the repression in Bonds

The questions I have is how do the hundreds of TRILLIONs in Interest Rate Swaps that have been growing on JP Morgan's books by the tens of Trillions every quarter factor into these low interest rates on the soveriegn bonds? Who is involved in these derivatives and for what economic purpose? Is there a chance that these IRS derivatives are the source of the recent losses over at JP Morgan? Is there a possibility that the low interest rates are a result of these derivatives as opposed to investor demand?