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Swedish Alecta has sold off an estimated $8B of US Treasury Bonds

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Re: Swedish Alecta has sold off an estimated $8B of US Treasury Bonds

#131

Post by jacquesm »

robinsoncrusue wrote: post #130
jacquesm wrote: post #109

Earlier quoted context omitted.

Eurobonds. It may actually happen if this continues. But given the speed of the usual EU decision process I would not be surprised if it takes them longer than the current US administration to finally agree on the various terms. And that's good for Europe in multiple ways. https://commission.europa.eu/strategy-and-policy/eu-budget/e... In the meantime: German, Dutch, UK (technically not EU), Swiss, Nordic paper is al…

Eurozone has a looming debt crisis. ECB is actively capping the yields for countries bonds from Spain and Portugal which are showing stress signals. This will not end well for ECB this time around if they end up something like 2012. https://substack.com/home/post/p-185202466

You're going to make a lot of money then by shorting EU stocks, right?

Re: Swedish Alecta has sold off an estimated $8B of US Treasury Bonds

#132

Post by daneel_w »

marcyb5st wrote: post #121
ectospheno wrote: post #40

An equally valid headline is "Investors purchased $8B of US Treasury Bonds". Never really got the point of people announcing US Treasury sales like its a big thing. Someone else not thinking with their emotions can, and will buy them. Its like announcing publicly you are selling your Honda. Its your Honda bro, sell it.

It is the second substantial sell from EU. Additionally, those things gain momentum fast since the later you sell the less money you make from the bonds you are selling. So everyone doesn't want to be last and the sell-off takes off fast and violently, forcing unmanageable interest rates.

What was the first substantial sale?

Re: Swedish Alecta has sold off an estimated $8B of US Treasury Bonds

#133

Post by toomuchtodo »

jacquesm wrote: post #110
kasey_junk wrote: post #54

Earlier quoted context omitted.

You can’t invest in EU sovereign debt though, only the constituent countries. The problem is that US treasuries have a bunch of features that can’t be replicated because of the size of the US economy. The only choice that comes close is China whose bonds are too illiberal to trade the same (and China has no interest in liberalizing them).

You can actually, but the volumes are too low to absorb a massive sell-off of US treasury paper.

So the EU should issue more volume and establish a strategy to start rotating from US debt to EU debt. No one is calling for dumping $8T of treasuries on the market overnight; it's entirely reasonable to start issuing Euro debt and communicating the expectation to start selling down US treasuries to European entities that hold them.

"Plan the work and work the plan."

Re: Swedish Alecta has sold off an estimated $8B of US Treasury Bonds

#134

Post by loeg »

vkou wrote: post #77
loeg wrote: post #74

Earlier quoted context omitted.

The president can mull whatever he wants; he doesn't have the authority to not pay.

He can mull all he wants and half the time, that mulling turns into reality. In practice, he has the authority to do anything he wants. Who is going to stop him? You? His pets in Congress? JPow's private hit squad? Clarence Thomas? The first rule of neo-America is that you're playing the Chairman's Game[1], and there are no more rules . Its counterparties should bargain with it accordingly. --- [1] https://en.wikiped…

> Who is going to stop him? You? His pets in Congress? JPow's private hit squad? Clarence Thomas?

Yes, ultimately Clarence Thomas and his eight friends, or Congress.

Re: Swedish Alecta has sold off an estimated $8B of US Treasury Bonds

#135

Post by TacticalCoder »

Sytten wrote: post #27

The problem is that Europe doesn't have a European bond market to compete against the US bond market. It has the economic size and stability but not the will right now. Europe did try it a bit during COVID but financial services are just not there yet. The Euro very well become a reserve currency in a multipolar world if Europeans decide they want to shoulder it.

> It has the economic size and stability but not the will right now.

The european union's GDP is a solid 50% behind the US (20 trillion vs 30 trillion). But more alarmingly the growth in the european union since the 2008 financial crisis has been totally anaemic: the growth doesn't even counter inflation and that growth only came at the cost of gigantic additional public debt. Meanwhile both the US and China's GDPs grew like mad.

I also dispute the stability of the EU: in many countries the people aren't happy at all and the far-right are winning elections everywhere. And it's only through tactics (like the center-right siding with the ultra far left in France to counter the far-right party who won the election) that parties that aren't the far-right are managing to prevent the far-right from reigning already.

For example in the European Parliament 36% of the 720 seats are for far-right parties. And that's after all the other parties colluding (including with the far left) to prevent the far right from having more seats.

And as people are more and more dissatisfied with the current situation in the EU, the far-right keep winning more and more voters (sounds familiar?).

> The Euro very well become a reserve currency in a multipolar world if Europeans decide they want to shoulder it.

The Euro is only 27 years old, is a badly conceived currency and may turn out to be one of the shortest lived currency ever. There's no way it's ready to take on the role of the USD. France's finances, the eurozone's 2nd biggest economy, are crumbling (gigantic public debt and insane public deficit) and may very well be overtaken by the International Monetary Fund (like it happened to Greece) soon.

Germany is trying very hard to ban its far-right AFD party from the elections for they know they could very well win. If I'm not mistaken the leader of the AFD said if they won, they're out of the EU. Think it cannot happen? UK left the EU already.

It's not just the EURO that may be the shortest-lived currency ever: the EU is actually in trouble.

Re: Swedish Alecta has sold off an estimated $8B of US Treasury Bonds

#136

Post by jacquesm »

toomuchtodo wrote: post #133
jacquesm wrote: post #110

Earlier quoted context omitted.

You can actually, but the volumes are too low to absorb a massive sell-off of US treasury paper.

So the EU should issue more volume and establish a strategy to start rotating from US debt to EU debt. No one is calling for dumping $8T of treasuries on the market overnight; it's entirely reasonable to start issuing Euro debt and communicating the expectation to start selling down US treasuries to European entities that hold them. "Plan the work and work the plan."

Yes, they should. The interesting bit here is that the USA has been an endless sink for funds simply because they have been spending way above their means, and that this worked in large part because there was trust. Breaking that trust is super risky from a US point of view. Europe has been more conservative in their spending and as a result needs a place to park their excesses, because there are not enough ways to spend those internally. I think that this is a luxury problem to have, but at the same time I realize that financing the USA any further is something that is not responsible from an EU perspective.

Re: Swedish Alecta has sold off an estimated $8B of US Treasury Bonds

#137

Post by loeg »

abdullahkhalids wrote: post #102
toomuchtodo wrote: post #33

Earlier quoted context omitted.

https://www.cfr.org/trackers/cfr-sovereign-risk-tracker https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile...

On the first page, I see 9 countries which it claims have a default risk of 50% or higher in the next 5 years. Which means a probability of at least 1-0.5^9=0.998 that at least one of them will default. That's a crazily high confidence prediction. What is their track record? What did they predict 5 years ago and how did those predictions bear out?

To be clear, those countries are: Argentina, Belarus, Ghana, Pakistan, Russia, Sri Lanka, Tunisia, Ukraine, and Venezuela. It would not be shocking if any of those countries defaulted. Also: your math assumes events are independent, but at least the Belarus/Russia/Ukraine events are probably not independent.

Edit: whoops, CFR only gives Russia a 9/10 score, not the full 10/10 score of 50% default probability.

Re: Swedish Alecta has sold off an estimated $8B of US Treasury Bonds

#138

Post by ben_w »

overfeed wrote: post #123
AnimalMuppet wrote: post #116

Earlier quoted context omitted.

Under current conditions, though, they may be invaded and/or annexed. That's a risk.

That's one way to invite asymmetric warfare[1] on the mainland - the border with Canada is something that mostly exists on maps. 1. As recently wargamed by the Canadian military.

I'm remembering an old painting, and briefly wondered if we'd see a repeat: https://en.wikipedia.org/wiki/File:The_President%27s_House_b...

Then I remembered the building works, and thought "If it happened, how would anyone even notice?"

Re: Swedish Alecta has sold off an estimated $8B of US Treasury Bonds

#139

Post by loeg »

gambiting wrote: post #122
loeg wrote: post #68

Earlier quoted context omitted.

What makes you say "certainly," especially in the hypothetical scenario where the US is unstable? Canada has a relatively much shorter history as an independent nation. Canada heavily benefits from its southern neighbor, and has a host of domestic economic issues (low wages, high housing prices; whatever the farmers are on about) that could cause instability as well. I think Canada is reasonably stable, I just quibbl…

>>especially in the hypothetical scenario where the US is unstable? How does it feel to bury your head in the sand so hard that you can't see what's happening around you?

Do you think if you just sneer hard enough, it makes your viewpoint true or persuasive?

There are probably two or three different commenting guidelines this runs afoul of: https://news.ycombinator.com/newsguidelines.html

Re: Swedish Alecta has sold off an estimated $8B of US Treasury Bonds

#140

Post by vdupras »

marcyb5st wrote: post #118
jacquesm wrote: post #109

Earlier quoted context omitted.

Eurobonds. It may actually happen if this continues. But given the speed of the usual EU decision process I would not be surprised if it takes them longer than the current US administration to finally agree on the various terms. And that's good for Europe in multiple ways. https://commission.europa.eu/strategy-and-policy/eu-budget/e... In the meantime: German, Dutch, UK (technically not EU), Swiss, Nordic paper is al…

Swiss bonds are super safe, but they have ~0 interest rate and so you lose out on inflation.

Well, CHF gained 12% on USD YoY, so I guess that it ends up being much better yields than US treasuries.
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