Treasurys Point to Recovery?

If I believed for a second that the Fed didn't have its hand in the Treasury cookie jar, I'd totally buy this piece of information and maybe a TIP or twenty.


Treasuries fell, pushing 10-year yields to the highest level in four months, on prospects U.S. economic reports will show a sustained recovery. The yen weakened after the Bank of Japan said it will fight deflation by keeping interest rates near zero. Asian technology stocks rose.

The benchmark 10-year note yield rose two basis points, or 0.02 percentage point, to 3.7 percent, the highest since Aug. 13, as of 1:45 p.m. in Tokyo, according to BGCantor Market Data. The yen declined to a six-week low of 91.48 per dollar today. The MSCI Asia Pacific Index rose 0.8 percent to 117.82.

The yield curve, the gap between shorter- and longer-term U.S. Treasuries, widened to a record as investors bet an accelerating recovery in the world’s largest economy will feed inflation and hurt demand for new government debt. Separately, Bank of Japan Governor Masaaki Shirakawa said last night the central bank will “persistently” keep rates at “virtually zero” to combat deflation, fueling a drop in the yen.

“We’re seeing bond yields push up, offering support to the U.S. dollar, and backed by stronger economic data as well,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington.

The central bank will aim “to supply ample liquidity and maintain stability within the financial system,” Shirakawa said in a TV Tokyo interview. “If it is deemed necessary to achieve that, we are always prepared to act swiftly and decisively.”

In totally related news, WC Varones gives us an important lesson in sovereign debt with an open threat:

And don't you EVER buy a security backed by the full faith and credit of Timmy the Tax Cheat and Zimbabwe Ben.

Read the whole article if you are confused on the "why" of that statement.

I vote we start a petition of financial bloggers against Treasurys. Kind of like those undersexed teenagers who make a vow of chastity until marriage, we shall band together and start a movement against reckless and irresponsible investing for the greater moral fortitude of humanity. It's an honorable goal and all we're trying to do is save sovereign debt. Obviously the Treasury can't handle the huge responsibility of funding massive deficits and needs a time out.

Join me in T-bill celibacy, will you? Just say no. Hell no. Lock up your wallet and hide it away in the tower like Rapunzel otherwise Timmy and crew might violate your investments. And my guess is he won't even leave a greasy $20 on the nightstand when he's done.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.