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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

#31

Post by JanisErdmanis »

stackghost wrote: post #15
onraglanroad wrote: post #3

What would be more serious is if the Norwegian Government Pension Fund started to sell off US investments. That runs around $2 trillion.

Avalanches can start with a single stone. EU together with UK and Canada hold more Treasurys than the entire rest of the world combined, and if they dumped them all at once it would be significantly painful for the average American as interest rates would spike, as would inflation. The Dollar would decline against most other major currencies. However dumping that much debt all at once would require the sellers to hea…

> However dumping that much debt all at once would require the sellers to heavily discount a large portion of their bonds, earning them increasingly fewer, and paying in (depreciating) dollars.

I think all investors are now looking at this with this foresight. Being the first to dump seems to be the winning game here.

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

#33

Post by toomuchtodo »

loeg wrote: post #29
toomuchtodo wrote: post #18

Earlier quoted context omitted.

Sovereign debt of a more politically stable nation state or other monetary union, if you are investing at these levels. If you're an individual, you have more options, although there will be fierce debate about the risk profile (as US Treasuries were historically considered to be risk free). https://www.bogleheads.org/forum/viewtopic.php?t=449401

Which nation states might you consider more politically stable than the US, even now?

https://www.cfr.org/trackers/cfr-sovereign-risk-tracker

https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile...

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

#35

Post by stackghost »

JanisErdmanis wrote: post #31
stackghost wrote: post #15

Earlier quoted context omitted.

Avalanches can start with a single stone. EU together with UK and Canada hold more Treasurys than the entire rest of the world combined, and if they dumped them all at once it would be significantly painful for the average American as interest rates would spike, as would inflation. The Dollar would decline against most other major currencies. However dumping that much debt all at once would require the sellers to hea…

> However dumping that much debt all at once would require the sellers to heavily discount a large portion of their bonds, earning them increasingly fewer, and paying in (depreciating) dollars. I think all investors are now looking at this with this foresight. Being the first to dump seems to be the winning game here.

>I think all investors are now looking at this with this foresight. Being the first to dump seems to be the winning game here.

When you're talking about hundreds of billions of dollars worth of bonds you simply can't move that much in one go. That's an elephant-in-the-bathtub situation where your moves disturb the market because of their size.

Even the first entity to dump would still have to discount a lot of their bonds. Nobody on the bond market is going to make a $200B snap purchase.

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

#36

Post by wrs »

irishcoffee wrote: post #30
margalabargala wrote: post #7

Earlier quoted context omitted.

1/4000th in this context seems huge to be honest.

If the US paid $8B towards it debt every _day_ it would take over thirteen _years_ (completely ignoring interest accumulation, which isn't realistic) to pay off $38T in debt. I don't see how this is huge in context, it is indeed symbolic. Please don't get me wrong here, I am neither advocating the selling or not selling of US bonds. This specific sale just isn't statically significant in a vacuum. If this precipitate…

Regarding your last sentence, this isn't happening in a vacuum, and rejecting the risk-free assumption behind US debt seems like a symbol with a lot of information content.

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

#37

Post by loeg »

toomuchtodo wrote: post #33
loeg wrote: post #29

Earlier quoted context omitted.

Which nation states might you consider more politically stable than the US, even now?

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

> The CFR Sovereign Risk Tracker can be used to gauge the vulnerability of emerging markets to default on external debt.

Sort of definitionally, nothing in that list is going to be more politically stable than the US.

In the second link, the author gives slightly lower country risk premiums (0% vs 0.2%) to Australia, Canada, Denmark, Germany, Liechtenstein, Luxembourg, Netherlands, New Zealand, Norway, Singapore, Sweden, and Switzerland. Setting aside the practicality of these recommendations (how much debt does Liechtenstein issue? or Germany, for that matter?): in a world where the US is unstable, it's hard to imagine Canada being risk-free.

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

#38

Post by christkv »

onraglanroad wrote: post #3

What would be more serious is if the Norwegian Government Pension Fund started to sell off US investments. That runs around $2 trillion.

You have no idea how that would destroy the Norwegian State. They are addicted to money from that fund. A collapse in it's value would have direct impact on the finances of the state. Nearly 1/4 of the budget is funded from that found a year.

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

#39

Post by coredev_ »

kavalg wrote: post #24
toomuchtodo wrote: post #18

Earlier quoted context omitted.

Sovereign debt of a more politically stable nation state or other monetary union, if you are investing at these levels. If you're an individual, you have more options, although there will be fierce debate about the risk profile (as US Treasuries were historically considered to be risk free). https://www.bogleheads.org/forum/viewtopic.php?t=449401

But I am having a hard time identifying this union/nation. Unfortunately, it feels like the EU is set on a downward trajectory.

I'm a bit baffled by this - are you saying that you can't identify a single market in the whole world that is worth to invest in & stable except US?

Also I don't see that EU as a whole is on a downward trajectory, there are a lot of areas that are super strong, one being the defence industry.

US on the other hand - who wants to invest in or trade with them when they treat the rest of the world (including close friends) as shit.

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

#40

Post by ectospheno »

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.
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