U.S. Treasuries weaken as debt, budget uncertainty persists (click title to entry - thank you)
11:39 28/07/2011
MOSCOW, July 28 (RIA Novosti)
The price of benchmark 10-year U.S. Treasuries edged down on Wednesday and demand at an auction to sell five-year bonds was low, as Congress failed to agree a deal on state debt increase and the budget deficit.
The 10-year paper yield rose six basis points to 3.01 percent. Bonds with a 3.125 percent coupon became 0.25 bp cheaper at 101.22 percent.
The U.S. Finance Ministry sold $35 billion worth of Treasuries at an auction where demand exceeded supply more than twice over, but was lower than at the last four sales.
Click here for pie graph of debt distribution (click here) and how the interest is paid. To most people 10 year Notes or T-Notes are unfamiliar jargon, but, in this graph it is noteworthy to realize that is the way the majority of the debt is financed.
This is an example from Wikipedia as to what T-Notes are and how they actually deliver on payment over ten years. It is fairly simple and straight forward as to how the USA uses borrowed money to pay bills.
Treasury notes (or T-Notes) mature in one to ten years. They have a coupon payment every six months, and are commonly issued with maturities dates between 1 to 10 years, with denominations of $1,000. In the basic transaction, one buys a "$1,000" T-Note for say, $950, collects interest over 10 years of say, 3% per year, which comes to $30 yearly, and at the end of the 10 years cashes it in for $1000. So, $950 over the course of 10 years becomes $1300.
This is a second accounting of the same auction discussed in Ria Novosti, a Russia newspaper. This is from Reuters.
NEW YORK, July 27 (Reuters) - The U.S. Treasury sold $35 billion worth (click here) of five-year notes on Wednesday in a lackluster auction, with foreign demand hitting a five-month low as time
runs short for the government to raise the national debt limit.
The auction, the second of this week's three offerings totaling $99 billion, extended a pattern of soft interest from overseas being offset by increasingly robust demand from large
domestic investors.
The rising domestic participation suggests some investors, at least, see no alternative to U.S. government bonds even in the face of a default or possible ratings downgrade. While not stellar, the auction was by no means a disaster, and the Treasury market only added modestly to earlier losses. Thursday's $29 billion auction of seven-year debt will end the week's offerings. For more, see [US/]...
This reporting about the US Treasury auction in July 27, 2011 is a realization that the decline in the interest in US Treasury Notes has already begun even before any downgrading.
The downgrading will cause less interest, but, will not eliminate the purchase of these form of securities in the financial markets. What a downgrading means is that the interest paid on these notes will increase to investors and cost the USA citizen more money to pay.
This is a clear indication the Republican Caucus of the House of Representatives cares very little about the well being of the average citizen and prefer to keep their wealth in order to invest in commodities that help finance the USA debt such as foreign oil exporters. Oh, yes. See there is a conflict of interest with Republicans. They can disregard any downgrading as their cronies don't really see it as a measure of USA sovereignty so much as a change in strategy for their investments in the market place. Follow? The Republicans and their cronies don't have anything at stake here. Nothing. They can pick up their chips and play elsewhere or better yet continue to invest in the Treasury Notes and receive higher interest. See, the reason President Obama is upset up all this is because he knows the Republicans nearly prefer to have the USA default for reasons of higher income to their cronies and themselves while causing hardship to the Middle Class and higher incidence of poverty.
The debate by Republicans is sincerely void of any loyalty to the USA, so much as loyalty to Wall Street. Republicans nearly prefer to have the USA rated with a B or C rating before sincerely showing concern. To them our Treasury Notes are not so much about sovereignty, but, of where does one place their money to earn money.
Rarely does anyone bring up the reason why oil and gas are the primary forms of energy in the USA. One of the reasons is not just that the USA is dependent, it is because the USA is 'secured' by that dependence. Oil exporters are the third major holder of USA debt. So, the USA is not necessarily resolved to change that so much as support their debt holders. It is why most environmentalists sincerely don't understand the argument to "Drill Here, Drill Now." They actually believe the drilling is for domestic use, no different than hydraulic fracturing to secure gas. None of that is going to make a difference to the USA as LNG (Liquefied Natural Gas) is being transported (adding the CO2 component to the LNG) to other countries such as India. The offshore oil in the East and West Coast waters isn't really significant. It is a very minor amount that will never sincerely serve as a way to reduce USA dependency because new drivers are added to the roads of the USA everyday in Motor Vehicle Agencies across the country. The USA is dependent on oil and gas to support the holders of debt and according to Republicans that should happen rather than 'Go Green.'
Unfortunately, Treasury Secretary Geithner decided to allow more time three months ago to assist lawmakers, primarily in the House, to come to terms with what a National Debt Ceiling is and how it has to be treated to continue the sovereignty of the USA without any assault including the value of its currency and the esteem of its Treasury Notes. He thought it would be helpful so that calamities that occurred on July 27th would not occur. The Republicans refused to acknowledge their responsibility within that time limit so much as viewing it as an inconvenience to the length of time before default and more time to 'play' political games full of nonsense. So, while Joe What's His Name in the House BELIEVES he knows there is nothing to worry about regarding August 2nd, he is DEFINATELY "W"rong when it comes to the well being of the Middle Class and Poor of the USA.
DO NOT.
DO NOT.
DO NOT, elect Republicans to government at the federal level again !!!!!!!
