Advertisement

Kamis, 27 Desember 2012

The Housing Bust Gave Birth To A Trillion Dollar Buyer Of US Treasuries

View this email online | Add newsletter@businessinsider.com to your address book
Money Game Share this Email
Home Tech Finance Markets Politics Strategy Entertainment Advertising Retail Sports Life

Thursday, December 27, 2012
Find Us on Facebook Follow US on Twitter
The Housing Bust Gave Birth To A Trillion Dollar Buyer Of US Treasuries

UBS's Maury Harris, who is frequently recognized as the most accurate economist on Wall Street, shared an important chart with Business Insider when we had lunch with him last week.

It compares the year-over-year change in U.S. Federal government debt and home mortage debt for each year since the heyday of the housing bubble.

"Over the past 6 years, an around $1 1/8 trillion downsizing in per annum net home mortgage financing has accompanied an around $7/8 trillion upswing in federal borrowing per annum," said Harris. In other words, the size of the mortgage bond market has shrunk by much more than the Treasury bond market has grown.

Back when the U.S. housing market was booming, the mortgage bonds it generated was an enormous source of fixed-income securities for investors.  Today, with home prices way down and home purchases only beginning to recover, the size of the mortgage bond market is only a fraction of what it used to be.

Meanwhile, data suggests that demand for bonds is only growing.

"Federal borrowing is 'filling in' instead of 'crowding out,'" said Harris. 

You could actually argue that there isn't enough debt out there going around.

Harris believes that the tight supply in the bond market will keep investors buying Treasuries for years.

This dynamic should quell some fears that demand for Treasuries will just disappear and send borrowing costs/interest rates surging in the near-term.

Disappearance of "Bond Market Vigilantes"



Read »


Also On Money Game Today:
Advertisement

chart of the day, regions with greatest potential for yieldfall, december 2012

CHART OF THE DAY: The US Stock Market Is Now One Of The Most Expensive In The World
Euribor eurodollar calendar spreads central bank trade of the year

CHART OF THE DAY: The Defining Central Bank Trade Of 2013
chart of the day, gold eft driving gold price appreciation, december 2012

CHART OF THE DAY: November 18, 2004 Was Critical For The 8-Year Rally In Gold
Share this: Facebook Facebook Twitter Twitter Digg Digg Reddit Reddit StumbleUpon StumbleUpon LinkedIn LinkedIn
Follow us on Facebook Follow us on Twitter
The email address for your subscription is: ipat39@gmail.com
Change Your Email Address | Unsubscribe | Subscribe | Subscribe to the Money Game RSS Feed
Business Insider. 257 Park Avenue South, New York, NY 10010
Terms of Service | Privacy Policy


If you believe this has been sent to you in error, please safely unsubscribe.

Tidak ada komentar:

Posting Komentar