Walk a Kb or Two in my Moccasins- Nobody 'splained it to me like that!

Simple answers to Complex Questions and Complex Answers to Simple Questions. In real life, I'm a Greater-Toronto (Canada) Realtor with RE/MAX Hallmark Realty Ltd, Brokerage. I first joined RE/MAX in 1983 and was first Registered to Trade in Real Estate in Ontario in 1974. Formerly known as "Two-Finger Ramblings of a Forensic Acuitant turned Community Synthesizer"

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Wednesday, January 19, 2011

Who's lying? O'Bie v.2? Berwhackie circa 1935? Stock-sales rep? Bond-baron? or Who doesn't care?


Obama-Bernanke Bonds Show Real Yields Lure Investors (Update3)

By Cordell Eddings

Jan. 18 (Bloomberg) -- The highest inflation-adjusted yields in the world’s most-developed bond markets are appeasing investors waiting for President Barack Obama to begin reducing the more than $1.2 trillion U.S. budget deficit.

Treasury 10-year notes pay 1.88 percent after subtracting consumer price increases, compared with 1.41 percent for German bunds and 1.13 percent for Japanese government bonds. Gilts yield four basis points less than the U.K.’s inflation rate.

Obama and Federal Reserve Chairman Ben S. Bernanke are benefiting from the slowest inflation, excluding food and energy costs, since before the 1960s as so-called real yields lure investors to finance the deficit and stimulate the economy. Foreign buyers, who own more than half the $8.86 trillion in outstanding U.S. marketable debt, have added to their holdings of Treasuries for 19 consecutive months through November.
“There has been grumbling about the deficit, but the market is betting that policy makers will do the right thing and focus on growth, which will help the debt picture in the long run,” Jack McIntyre, a fund manager who oversees $21 billion in debt at Brandywine Global Investment Management in Philadelphia, said. “Real yields are at levels that make them attractive with the lack of inflation pressure the market is seeing, a still weak recovery and a stubborn lack of job growth.”

blah blah --snip

“We all have to plug our noses, dive in and accept the higher deficits,” said James Sarni, senior managing partner at Payden & Rygel in Los Angeles, which manages $56 billion. “People are willing to be patient because there is overriding sentiment and hope that Washington will have some credible deficit reduction plan in the future. But the first priority is making sure the economy does not slip back into a recession.”

(oh yes excellent thinking -- hold your nose & keep it in the trough)

snip ..

Bill Gross says "au contraire!"

Real yields aren’t enough to entice the manager of the world’s biggest bond fund. Pacific Investment Management Co.’s Bill Gross said investors should avoid dollar denominated assets as “mindless” spending may accelerate inflation, weaken the dollar and lose America’s AAA credit rating.

“The deficit, the debt level, the cost of that debt, ultimately bears a significant burden on an economy,” Gross said in an interview with Margaret Brennan on Bloomberg Television’s “InBusiness” program on Jan. 12.
He estimated that if interest rates went up by 50 percent, or doubled, the deficit would probably expand by $300 billion to $400 billion.

“The problem is that politicians and citizens alike have no clear vision of the costs of a seemingly perpetual trillion dollar annual deficit,” Gross wrote in his January investment outlook. “As long as the stock market pulsates upward and job growth continues, there is an abiding conviction that all is well and that ‘old normal’ norms have returned. Not likely. There will be pain aplenty.”

snip...

"Another nose-holder"
The Standard & Poor’s 500 Index has advanced 26.5 percent from last year’s closing low on July 2, the Reuters/Jefferies CRB Index of raw materials is 33.9 percent higher than in May and IntercontinentalExchange Inc.’s U.S. Dollar Index is up 4.2 percent since November.

“There are structural headwinds to growth but if the U.S. can continue to grow, bondholders will feel better about deficit cuts going forward,” said Eric Pellicciaro, New York-based head of global rates investments at BlackRock Inc., which manages about $1 trillion in bonds. “The big trap Europe and Japan have is in the lack of confidence for above trend growth. Treasuries are looking good where they are on a relative basis.”

read whole thing
http://noir.bloomberg.com/apps/news?pid=20601109&sid=aLoB3peWgG50&pos=10

Who's lying? O'b v.2 as Clinton v.2? Berwhackie? Stock-sales rep? Bond-baron?
or
Who doesn't care .... as long as nobody panics until they're term is done?

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