Go figure . . .

click to embiggen
Treasury Debt
Source: NYT

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

11 Responses to “Biggest Buyer of Treasuries in 2013? Da Fed”

  1. Global Eyes says:

    Before there was a Federal Reserve or stock market, there was George Washington, whose birthday is today. Based on patriotism alone, he might be a buyer of Treasuries -but I’m sure he’d own equities, too.
    Read all about him here — > http://www.Only1CanBeTheBest.com

  2. yon’ FedRes, if they wanted to be Really Helpful, should start buying that ‘restricted Treasury Note’-Trash that the Congress stuffed into the SSI Coffers..

    past that, noted this: “click to embiggen”…it B you, BR~

  3. Angryman1 says:

    wow, the us public went nuts during/after the crash

  4. Willy2 says:

    - Guess what would have happened if the FED hadn’t bought any T-bonds. Rising interest rates any one ?
    - There’s something I don’t understand. US budget deficit in 2009 was at $ 1.9 trillion but the chart tells that “net issuance” was at only ~ 1.4 trillion.
    - I know the FED bought 103% of all T-bonds issued in 2013. In other words, the FED has become the market for T-bonds.
    - Guess what happens when interest rates go “through the roof” back to 15% (Charles Nenner) ?
    - Even rates going as high 5 to 5.25% would force the US to default on its debts. (Google the words “Fred Mishkin”, “Crunchtime”, “2013″.)

    • RobertKerr says:

      “Guess what would have happened if the FED hadn’t … ”

      The same thing that will happen when the Fed starts to unwind this? Are there any good reasons to believe that we’ve done anything but delay the day of reckoning and the economic pain that it will bring?

      • You are aware that Treasuries are dated (5 year, 10 year, etc.) and the Fed can just hold these to maturity, right?

      • ch says:

        Barry is right, the Fed can hold these to maturity. In fact, the Fed is a unique entity because when it creates currency to buy Treasuries, it simultaneously creates a liability (the cash) & an asset (the purchased Treasuries). For this reason, there is no limit to the Fed’s balance sheet. It is theoretically infinite (and is already ~25% of US GDP, highest since WWII.)

        Where it starts to get really interesting started about 12-18 months ago – when it became apparent that to Mr. Kerr’s point, there is no possible exit scenario when a holder of 25% of GDP worth of bonds tries to sell, & given that, there is no possible way the Fed can do anything but continue to expand their balance sheet (lest rates rise as any market-driven bond buyer with a brain will demand at least slightly higher rates to compensate them for the risk that the Fed could in theory try to sell someday).

        When that began happening, foreign sovereign buyers stopped adding to their Treasury holdings (see this post about the Fed being by far the biggest UST buyer) and instead began deploying capital into productive hard assets – oil/oilfields, iron ore and copper stock piles, & even gold.

        This is where we stand now. Few in the West are thinking more than a couple months ahead of time about how this movie could play out. It’s a fairly straight forward decision tree.

  5. ch says:

    2 questions:

    1. Where does the Fed get their capital?

    2. Why did foreign official buyers buy vastly more gold than US Treasuries?

  6. constantnormal says:

    … it will be interesting to see if the Fed can dial down its purchases of Treasuries at a rate comparable to the expansion in US Treasury debt purchases produced by a recovering economy, combined with the shrinking issuance of Treasury debt issuance as the deficit continues to implode … if they manage that, there will be little or no change in rates … my guess is that the Fed will unwind QE3 a little faster than combination of an expanding economy plus a declining issuance of Treasuries, which should produce a modest increase in rates (perhaps no more than we have already seen this year) …

  7. RW says:

    [yawn], wake me when long US interest rates show a clear upward trend and non-us buyers really do buy more gold (net) than treasuries.

  8. LeftCoastIndependent says:

    All I know is, the Benchmark Bud Light six pack is now up to $7.99. Don’t tell me that the FED money printing machine doesn’t cause inflation.