straight talk: freezing Russia's US treasuring holdings damages the value of said US treasuring holdings for everyone else with a brain + sovereign self interest
Only for those who consider their self interest to require acting out imperial desires. It's not a terribly surprising precedent that if you attack another country, your foreign assets might be frozen and eventually seized to pay for all the damage you cause.
The article gives two reasons why bonds are getting harder to sell: the fed is buying less because their are getting off QE; and the US government deficit is ballooning thus more bonds are hitting the market. Sorry to burst your bubble but China’s gas station had no impact on Treasuries.
You don't think that refusing to pay your debt, no matter moral qualms about the holder, impacts the value of your debt?
Investors could start wondering when you'll accuse them of being evil for any reason and refuse to pay them.
Good thing there is that whole court system and associated bureaucracy rather than autocratic rule supporting "accuse them of being evil for any reason". If any "investors" are actually wondering whether they're at significant risk of the US government "refusing to pay them" (read: seizing their assets), their first stop should be an attorney who can give them a rough idea if they're engaged in illegal activity. This is a good idea if one has any assets within the reach of US jurisdiction, regardless of whether those assets are government bonds or not. And sure the justice system, the legal system, and USian pan-jurisdiction all have their problems. But with this situation of ethnic cleansing in service of some hollow Make Russia Great Again nonsense, both the legal outcome and the morality are quite clear cut.
Pretty sure that's not how it works. If a party you lend to can unilaterally it becomes much harder to justify investing.
That's simply how it goes. Lawyers don't come into it since the decision is unilateral.
Except the whole point of courts is that these decisions aren't unilateral. From what I've seen, Russia's assets have been frozen (not repudiated), awaiting a much longer legal process (involving many lawyers) where they will (hopefully) be turned over to Ukraine as war reparations (once again, transferred not repudiated).
The yield curve is inverted so short term treasuries are great right now. There’s little reason to have a typical savings or money market account or even a money market / bill fund when you can just put together a 3 month treasury ladder and get 5.25+%.
Longer term treasury bonds don’t seem so smart given the threat of sustained inflation. If you’re looking for longer term fixed income, maybe TIPS or Series I bonds are a good choice. I bond rates aren’t as great as they were a few years ago, but until end of this month you can take advantage of 5.27%, including a fixed rate component of 1.30% which is a 17 year high. You‘ve got a bond that will beat inflation by 1+% for 30 years. Not too bad.
Yeah, I think this is part of the reason we have continuing inflation, and a continuing bubble in dumb stocks. The Fed still isn't offering positive real post-tax returns.
Good point that I failed to list. It's tough to have positive -real- returns in risk-free fixed income. One advantage of government debt is that it's tax-free at the state level which is important if you live in California, New York, New Jersey, and so on.
> There’s little reason to have a typical savings or money market account or even a money market / bill fund when you can just put together a 3 month treasury ladder and get 5.25+%.
Quibble: There are Treasury money-market funds with the same tax advantages (just pay attention to the government obligation percentages when you do your taxes), and basically the same yields, because that is in fact what they're doing under the hood. And they can be a little easier to deal with than putting a ladder together yourself. E.g., FZFXX, SNSXX, VUSXX.
Absolutely and yes they're convenient. It comes down to personal preference. I don't feel like paying someone to create a ladder for me, at least not 20-30 basis points. Most people would be fine with the funds, too.
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[ 2.2 ms ] story [ 49.3 ms ] threadLonger term treasury bonds don’t seem so smart given the threat of sustained inflation. If you’re looking for longer term fixed income, maybe TIPS or Series I bonds are a good choice. I bond rates aren’t as great as they were a few years ago, but until end of this month you can take advantage of 5.27%, including a fixed rate component of 1.30% which is a 17 year high. You‘ve got a bond that will beat inflation by 1+% for 30 years. Not too bad.
Pre-tax. You'll owe federal income tax on the interest.
Quibble: There are Treasury money-market funds with the same tax advantages (just pay attention to the government obligation percentages when you do your taxes), and basically the same yields, because that is in fact what they're doing under the hood. And they can be a little easier to deal with than putting a ladder together yourself. E.g., FZFXX, SNSXX, VUSXX.