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

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		Home Tech Finance Markets Politics Strategy Entertainment Advertising Retail Sports Life Thursday, December 27, 2012 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: FINANCIAL ADVISOR INSIGHTS: US Housing's 'Distressing Gap' Is Not Going Anywhere Scott Brown Bottom In Jeopardy Advertisement CHART OF THE DAY: The US Stock Market Is Now One Of The Most Expensive In The World CHART OF THE DAY: The Defining Central Bank Trade Of 2013 CHART OF THE DAY: November 18, 2004 Was Critical For The 8-Year Rally In Gold Share this: Facebook Twitter Digg Reddit StumbleUpon LinkedIn 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

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