Tuesday, April 19, 2011

Bond vigilantes

So S&P gave a "negative" rating to U.S. Treasuries because of all the teabaggery going on in the House of Representatives. YAWN. S&P is the same outfit that said that a bundle of liar loans guaranteed to go bad was an AAA-grade mortgage-backed security, remember? And the teabaggers as usual whine that continued deficit spending during a depression will cause bond vigilantes are going to show up right now, any moment now, to drive the interest rates on U.S. Treasury securities up into the stratosphere. So what's happening there? This penguin went off to Bankrate.com and found.... THIS:

This week Month ago Year ago
One-Year Treasury Constant Maturity 0.24 0.23 0.44
91-day T-bill auction avg disc rate 0.060 0.095 0.145
182-day T-bill auction avg disc rate 0.110 0.150 0.220
Two-Year Treasury Constant Maturity 0.77 0.61 1.05
Five-Year Treasury Constant Maturity 2.22 1.95 2.57
Ten-Year Treasury Constant Maturity 3.51 3.29 3.85
One-Year CMT (Monthly) 0.26 0.29 0.40
One-Year MTA 0.295 0.307 0.421
The interest paid by Treasuries was low a year ago, and is even lower today. No bond vigilantes in sight. None likely to ever be in sight, since the Federal Reserve would step in thanks to that ultra-modern invention the PRINTING PRESS (invented fairly recently -- in 1440 -- recent in geological time, anyhow!) and print money to buy Treasuries if there were ever any risk of not selling out an issue for a reasonable price and thus a bond vigilante would be shooting himself in the foot betting on a rise in interest rate on Treasuries. But I'm sure the bond vigilantes will show up any minute now to bid up the costs of U.S. Treasuries. Right after they finish petting their pink unicorns under their cotton candy trees, eh?

-- Badtux the Snarky Economics Penguin

1 comment:

  1. thank you bad tux I had a pissing contest with a wing nut on another blog about this and I am still curious how these agencies can still have any clout after their monumental fuck up during the derivative fiasco in fact it would appear their whole mission is compromised and they should be shut down but not before the indictments


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