Archive for the ‘Bond market’ Category
America’s municipal-bond market: State of pay
Dec 10th 2009 | WASHINGTON, DC
From The Economist print edition
A federal subsidy may change the market for good
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[Greg Ip] THE federal government may have astronomical deficits but it can still borrow with ease at rock-bottom rates. Not so states, municipal governments and other government agencies, such as school districts and public-transport bodies, which have historically borrowed at lower rates than the Treasury. That is because interest on municipal bonds is generally tax-exempt. Investors accept a lower yield on a muni-bond than on a comparable Treasury bond on which they pay tax.
Thanks to the financial crisis, however, that position has changed: municipal yields are much closer to and, in some cases, above those on Treasuries (see chart). Some borrowers have scaled back or shelved planned borrowing. Read the rest of this entry »
America’s public debt: Tomorrow’s burden
From The Economist print edition
America’s debt crisis will be chronic, not acute
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[Greg Ip] AS AMERICA’S financial crisis recedes, the rumblings of its next crisis can be heard. The federal government has wrapped its guarantees around banks and the housing market. It has borrowed hundreds of billions of dollars to stimulate the enfeebled economy, while tax revenues crumble. And in the years to come the cost of retirees’ benefits will explode. “There is every reason to worry that the banking crisis has simply morphed into a long-term government-debt crisis,” says Kenneth Rogoff of Harvard University.
But what kind would it be: acute or chronic? Read the rest of this entry »
Why Treasury bonds are selling off
Too much of a good thing
From The Economist print edition
The original story is linked here.
A wave of new borrowing threatens a port in a storm
IN THE trouble-tossed world of finance, the one safe place during the credit crisis has been America’s vast and liquid Treasury-bond market. No longer. Since touching a record low of 2.04% in mid-December, ten-year bond yields shot up above 2.9% on February 4th, continuing a sell-off that made January the worst month for government securities in decades.
There are several reasons for the reversal of fortunes, not all of them bad. Read the rest of this entry »
