Back on March 18th 2011 I posted a chart showing that Bill Gross one of the largest bond managers of Pimco, has been dumping his Treasury holdings. This new chart shows that QE2 has been mainly funded (63%) by our very own Federal Reserve through their POMO program (see the 2nd chart). So essentially the majority of the U.S. budget deficit is funded by central banks and with a sub 3% 10-year note who knows who else would buy bonds with the AFP reporting that the U.S. is already defaulting on their debt: http://ca.news.yahoo.com/china-ratings-house-says-us-defaulting-report-054309883.html
It seems from the 10-year breaking the 3% level that the treasury market might be pricing in some type of support for a QE3. I guess time will tell...
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