Cramer has said this & I agree. LIke a SMART homeowner refinancing when rates are low. Maybe they'll be logical and extend the maturities.
Dollar down 1% today. Foreign selling of U.S. stocks, bonds, other dollar assets. Scramble to raise cash.
Chinese roaring tiger has shrunk to a small angry hissing kitten. This matters, perhaps most of all to the US treasury bond market. China must sell what it can to bolster domestic economy.
Cramer on CNBC just said "China is a rich country and they own a lot of (U.S.) bonds so there is a lot they can do" (sell USTs).
The tiny pre-market drop of TBT (about $.5) is tiny given the huge crash in China, so something is going on under the surface. My guess is Chinese selling of USTs.
Almost 10% drop in Chinese stocks today. Chinese hold $1.5 trillion in USTs. Chinese sales of USTs may not have as big an impact on exchange rates as feared, since Chinese sales of US assets may be counterbalanced by US sales of Chinese stocks (heavily owned in many ETFs). In any event, the Chinese need liquidity & you sell the most liquid things, including USTs. We shall see.
Marenkov, do you ACTUALLY believe the rate of inflation is barely above zero? You must not live in California. rent, housing prices, food prices, medical care and many other things are going through the roof.
Also, economist Ed Yardeni & others have suggested that CB (near) zero rate policies have led to over-investment in productive capacity (including in commodities), and the increased supply has not been matched by an equal rise in demand. For example, probably half of the added oil production in the U.S. (shale frac oil) was made economically possible by very low rates. The rise in oil supply has overtaken demad, so prices have crashed.
The commodity collapse is at least 50% realted to the sharp deceleration of the Chinese economy, which started with the collapse of their property bubble a few months ago & has spread to stocks. Jim Grant who you mention is extremely opposed to the FEDs ( and ECB & BOJ) current policy of manipulating rates to near zero.
Cash (I'm including demand deposits) can lose value through inflation, but will not lose principle as a bond will when rates rise. 2.3% on a 10 year treasury does not compensate investors for purchasing power risk or interest rate risk or currency risk in my opinion.
I don't understand why there is any demand for bills, notes, or bonds paying close to zero (even negative yields in some places) when you can hold liquid cash or demand deposits. Any rise in rates would plunge the value of the bonds paying close to zero.
Don't pay up for retailers, especially those with infinite PEs like Amazon.
Strong Buy. $58-65.
Sentiment: Strong Buy
Amazing how you dodge bankruptcy Syb. A cat with 99 lives.
Sentiment: Strong Buy