Today looked as if the dollar carry trade might unwind. Fortunately, President Obama’s speech had a similar calming effect to Bernanke’s speech yesterday. It should be a little bit frightening that our top officials have to reassure markets that a weaker dollar is still a sure bet. It’s a delicate balance, right now.
The demand for treasuries was strong enough that we were able to auction off a lot of short term debt for free. $29 billion in 1 month bills were auctioned at 0%. Not too shabby.
Things aren’t looking good for many bondholders. Apparently that little problem in Dubai hasn’t been fully digested yet. Greece is having problems of their own after being downgraded by Fitch. This is what happens when running slightly larger deficits (5x) than what the EU guidelines allow. Moody’s hinted that the US and UK could someday lose their AAA rating. The US and UK will likely announce their defaults before ever actually being downgraded.
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When I first started reading this, I thought you...talking about how windy it was and you...
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