mann International International Economics-(us Bond Yields Surge)
Mann International is thought to be largely in agreement with comments made by former
US Federal Reserve Chairman, Alan Greenspan, in which he suggests that the rising yields being demanded by investors for holding US debt are the canary in the coal mine signaling imminent hikes in interest rates.
Mann International has long been of the opinion that the United States would not be able to continue to borrow money with impunity given the parlous state of its public finances and that the temporary reprieve being enjoyed by the US dollar is more attributable to the decline of the euro and the pound than to any vestiges of intrinsic safety that could have once been derived from storing wealth in the worlds reserve currency.
The yield on 10yr treasuries surged by 30 basis points in a mere two days to stand at over 3.90%. It is the highest since the collapse of Lehman brothers in 2008 and largely coincides with the Feds wind down of bond purchases and the surfeit of supply that its absence augurs.
Mann International also believes that the recent escalation in tensions between the US and China over the formers accusations of currency manipulation may have prompted China to begin selling off some of its $800bn of treasuries as a shot across the bows of an administration that relies on Chinas appetite for US debt to be able to fund its bailouts, stimulus packages and healthcare reform act.
Mann International says it will continue to advise clients to buy precious metals as the best store of wealth.