On a Day Like Today Two Things Come to Mind

First, I have grown suspect to the types of selling aberrations like the one that occurred today.  When days like this occur, I have learned to look and see if they are preceeding any large Treasury auctions.  As an American who has succumbed to the idea that we have saddled my son’s future with endless amounts of debt, I take small comforts in knowing that we have gotten to borrow at almost criminally low interest rates for the last two years.  And nothing drives down the US costs of funding than demand for US Treasuries during fire and brimstone moments where people run to the “one” safe currency.  While Gold is getting some play tonight, the USD is still the fear trade and the collateral of choice for shorts.   While I don’t know how much is up for sale in notional amount next week from the Treasury, I did notice that the US Treasury is selling 7, 10 and 30 year bonds which is not a weekly occurence.  One’s got to always wonder who benefits when everyone else looses.  Below is the table from http://www.treasurydirect.gov/RI/OFAnnce outlining upcoming auctions. 

  05-05-2010 3-YEAR NOTE 912828NC0 05-11-2010 05-17-2010 05-15-2013
  05-05-2010 10-YEAR NOTE 912828ND8 05-12-2010 05-17-2010 05-15-2020
  05-05-2010 30-YEAR BOND 912810QH4 05-13-2010 05-17-2010 05-15-2040
  05-06-2010 91-DAY BILL 912795V57 05-10-2010 05-13-2010 08-12-2010
  05-06-2010 183-DAY BILL 912795W72 05-10-2010 05-13-2010 11-12-2010

Second, despite all the fear and screaming over Greece burning, and Europe sliding into the Atlantic, one has to wonder how the largest Euro economies really lose anything with or without a Greek failure.  The game to be played is not to necessarily let Greece go, as that would destabilize the region politically and from a security perspective.  The game to be played is to see how far they can devalue the Euro before they commit to a market stabilizing bailout.  A cheap Euro is a much better catalyst for cyclical growth than subsidizing the PIGS fun in the sun lifestyles.


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