Can the USA fund its debt?

[MRC & Co]

Quote: Originally Posted by tunrida [The U.S. and the U.K.] “deserve to keep the Aaa rating (…) the likelihood of a default is so small, particularly in the U.S. because all we do is print money to pay it back (…) The notion of a default is so absurd, it’s another reflection of the absurdities in the financial markets.” -- Nobel laureate Joseph E. Stiglitz, 2010.02.08

[Uncle Festivus]

Now the Fed's QE winds down, the market takes control.....and rates rise

Quote: April 5 (Bloomberg) -- Treasury yields were at the highest level since June, after the biggest two-week rout in prices this year, as economists said a report today will show U.S. services industries are growing as the job market improves. Traders added to bets the Federal Reserve will raise interest rates as the fastest employment growth in three years indicates companies are gaining confidence. The U.S. is scheduled to sell $8 billion of 10-year Treasury Inflation- Protected Securities today, the first of four auctions this week totaling $82 billion. A three-year sale tomorrow will be for a record-matching $40 billion. “Treasury rates will soar,” said Kazuhito Miyabe, who helps oversee $12 billion as head of foreign fixed income in Tokyo at Toyota Asset Management Co., a unit of the world’s largest automaker. “Many investors may sell.”

[MRC & Co]

Lucky inflation is soft hey!

More printing to be done.

[Timmy]

Quote: Originally Posted by Uncle Festivus Now the Fed's QE winds down, the market takes control.....and rates rise Quote: April 5 (Bloomberg) -- Traders added to bets the Federal Reserve will raise interest rates ... "Treasury rates will soar," ... "Many investors may sell."

[MRC & Co]

ha ha, nice post Timmy!

Also, with the breakup of the EUR becoming a large fear, expectations of a stronger US dollar are being seen. USD can perhaps, even start to rally with 'risk', as has been the case lately due to liquidity looking for a home and peripheral currencies too small to house it.

An increasing USD or expectation thereof, will also cause the yield curve to flatten (as we are seeing) due to lower yield required (risk) of holding US dollars.

[Aussiejeff]

and the beat goes on.....

Quote: U.S.’s $13 Trillion Debt Poised to Overtake GDP: Chart of Day By Garfield Reynolds and Wes Goodman June 4 (Bloomberg) -- President Barack Obama is poised to increase the U.S. debt to a level that exceeds the value of the nation’s annual economic output, a step toward what Bill Gross called a “debt super cycle.” The CHART OF THE DAY tracks U.S. gross domestic product and the government’s total debt, which rose past $13 trillion for the first time this month. The amount owed will surpass GDP in 2012, based on forecasts by the International Monetary Fund. The lower panel shows U.S. annual GDP growth as tracked by the IMF, which projects the world’s largest economy to expand at a slower pace than the 3.2 percent average during the past five decades. “Over the long term, interest rates on government debt will likely have to rise to attract investors,” said Hiroki Shimazu, a market economist in Tokyo at Nikko Cordial Securities Inc., a unit of Japan’s third-largest publicly traded bank. “That will be a big burden on the government and the people.” Gross, who runs the world’s largest mutual fund at Pacific Investment Management Co. in Newport Beach, California, said in his June outlook report that “the debt super cycle trend” suggests U.S. economic growth won’t be enough to support the borrowings “if real interest rates were ever to go up instead of down.” Dan Fuss, who manages the Loomis Sayles Bond Fund, which beat 94 percent of competitors the past year, said last week that he sold all of his Treasury bonds because of prospects interest rates will rise as the U.S. borrows unprecedented amounts. Obama is borrowing record amounts to fund spending programs to help the economy recover from its longest recession since the 1930s. “The incremental borrower of funds in the U.S. capital markets is rapidly becoming the U.S. Treasury,” Boston-based Fuss said. "Do you really want to buy the debt of the biggest issuer?”

[Aussiejeff]

More great news!

Quote: One of the world's most eminent experts on public finance says the west is headed for a fiscal crisis of the state, and the United States will be broke within 15 years unless it addresses its unsustainable budget deficit.

[Aussiejeff]

...and there's more...DEBT that is... http://noir.bloomberg.com/apps/news?....A07DiN0&pos=7

From that article..

Quote: June 25 (Bloomberg) -- Regulators closed banks in Florida, Georgia and New Mexico today, awarding a third financial institution to Bond Street Holdings LLC, an investment firm that first bought banks in January. Bond Street’s Premier American Bank purchased Englewood, Florida-based Peninsula Bank, according to a statement on the Federal Deposit Insurance Corp.’s website. The three failures today cost the agency’s deposit-insurance fund $284.6 million.

[Aussiejeff]

This latest economic forecast bodes ill. Worsening indicators bolded. Last three especially..

Quote: Bloomberg Survey ================================================== ============ Release Period Prior Median Indicator Date Value Forecast ================================================== ============ Pers Inc MOM% 6/28 May 0.4% 0.5% Pers Spend MOM% 6/28 May 0.0% 0.1% Case Shiller Monthly YO 6/29 April 2.4% 3.5% Consumer Conf Index 6/29 June 63.3 62.9 Chicago PM Index 6/30 June 59.7 59.0 Initial Claims ,000’s 7/1 26-Jun 457 455 ISM Manu Index 7/1 June 59.7 59.0 Construct Spending MOM% 7/1 May 2.7% -0.7% Pending Homes MOM% 7/1 May 6.0% -14.4% Nonfarm Payrolls ,000’s 7/2 June 431 -110 Private Payrolls ,000’s 7/2 June 41 113 Manu Payrolls ,000’s 7/2 June 29 25 Unemploy Rate % 7/2 June 9.7% 9.8% Hourly Earnings MOM% 7/2 June 0.3% 0.1% Factory Orders MOM% 7/2 May 1.2% -0.5% ================================================== ============

[Aussiejeff]

**Bloomberg Survey Update**

================================================== ==========
Release Period Prior Median Actual
Indicator Date Value Forecast Value
================================================== ==========
Case Shiller Monthly YO 6/29 April 2.4% 3.5% 3.8%
Consumer Conf Index 6/29 June 63.3 62.9 52.9

"Unexpectedly" very bad result for US consumer confidence. No wonder the Eurozone & Dow tanked last night.

Also...

Quote: Consumers’ plans to buy automobiles, appliances and homes declined in June, with the percentage of people who said they intend to buy a car dropping to the lowest since records began in 1967, today’s report showed. Vacation plans also fell. http://noir.bloomberg.com/apps/news?...d=alVvoM9lnelQ