| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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U.S. Government Debt Still Feeds A Hungry World |
Forbes.com - Feb. 22, 2010 - by Matthew Craft
Sure, China is selling Treasury debt, but other countries are bellying up to bid on U.S. bonds
News from the Treasury Department that China is no longer the largest holder of U.S. Treasury debt prompted renewed warnings last week that foreigners could no longer be relied on to finance rising U.S. government deficits.
If China won't buy, who will? It's a question you're bound to hear as the Treasury lines up buyers for another $126 billion in debt this week, many of them foreign investors.
There's already a partial answer: Japan, and plenty of others.
A closer look at data from the Treasury makes the U.S. need for other foreigners to extend credit seem a little less desperate. China's Treasury holdings dropped $34 billion in December, allowing Japan to take the top spot, but the honor of holding the most U.S. government debt didn't just drop into Japan's lap. In November, Japan added $11 billion in Treasury bonds to end the year with $768 billion. That's $142 billion more than it held at the end of 2008.
Other countries that increased their holdings in December and over the course of the year: the United Kingdom (to $302 billion); Brazil ($160 billion) and, curiously enough, Hong Kong ($152 billion), part of China.
Mainland China added to its stockpile of U.S. debt in 2009, ending the year with $28 billion more than at the start. The plunge in its December holdings was almost entirely a result of selling $38 billion in short-term Treasury bills. China actually added a net $4.6 billion in long-term bonds.
It looks less like a fundamental change of course for China and more like a prudent move, said John Brady, who advises hedge funds and banks on interest-rate trades at MF Global. "China is simply tweaking its portfolio, letting Treasury bills expire," he said. The Treasury has begun extending the average maturity of its debt, tilting toward more long-term bonds than short-term bills, and China is following suit.
When its short-term Treasury bills expire, China may take the cash and then wait to invest it back into Treasury debt at higher rates, Brady said. The trade seems prescient now that 2-year yields have jumped from 0.72% Feb. 5 to a recent 0.88%, propelled by the Federal Reserve raising the discount rate, which it charges banks for emergency loans, a quarter point to 0.75%.
The Treasury sold $8 billion in 30-year inflation-protected bonds at a 2.13% interest rate Monday afternoon, the first auction of 30-year TIPS since 2001. The next auction, a sale of $44 billion in 2-year notes, comes Tuesday, followed by $42 billion in 5-years on Wednesday and $32 billion in 10-years on Thursday.
One way to gauge foreign demand has recently appeared less reliable. In recent auctions, the indirect bid -- often a proxy for foreign buyers -- has dropped and bids made directly to the Federal Reserve, which manages the Treasury auctions, have gained a greater share. Some suspect it's a result of large foreign buyers hiding their hands.
Large investors often go through one of 18 primary dealers, a collection of domestic and foreign banks required to participate in the Fed's open-market operations and Treasury auctions. The roster includes JPMorgan Chase ( JPM - news - people ), Bank of America ( BAC - news - people ) and Citigroup ( C - news - people ) as well as Japan's Mizuho Financial Group ( MFG - news - people ) and Switzerland's UBS ( UBS - news - people ), among others.
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