Former Treasury Secretary Robert Rubin, warned today about the risk of an "implosion" in the bond market, citing the soaring federal budget deficit and the Fed's QE programs are putting the U.S. in "terribly dangerous territory."
He says that QE2 "has a lot of risk," adding that the international reaction "horrendous."
The Trigger
Rubin, had previously issued a similar warning about the bond market in October. He further says (see Yahoo) that "Congress' vote on raising the deficit ceiling next spring could be the trigger for a rout in the Treasury market".
He says that China will not dump U.S. treassuries, because that would be "a financial version of the Cold War concept of Mutual Assured Destruction" "But he is worried about selling by the government's of Singapore, Hong Kong and Malaysia. "They could say ‘the Chinese are stuck but we're not,'"
There are many long and short bond ETFs on the market. For a list that we track live, please visit here.
Wednesday, November 17, 2010
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