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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

#51

Post by knorker »

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.

This is not exactly right. True, $8B is not earth shattering because of the US's enormous debt. But by removing a potential $8B owner, it is a reduction in demand, and thus a tiny reduction in price. This is literally the first rule of pricing: "supply and demand".

Sure, someone else is on the other side of the deal. But their demand is also satiated at a certain price point. Hell, if they wanted to buy from other sellers then it's not like T bills were not liquid.

Would you say the same if Norway's wealth fund offloaded their $181B? At those scales it would be more likely that it'd be visibly price affecting, and therefore affect the US's ability to borrow at existing cost.

So yes, when you sell your one NVDA, you are reducing demand and thus price. Epsilon, but nonzero.

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

#52

Post by thatguy0900 »

heathrow83829 wrote: post #42
zppln wrote: post #9

What are some realistic alternatives to US markets here? Selling is one thing, the question is what to buy instead? I mean, everyone starting to buy european instead would be great for stock prices, but it wouldn't make the underlying assets more valuable, right?

i've wondered this myself. I thought that everyone was selling bonds and just buying equities, gold and bitcoin. isn't that only game plan? bonds aren't investible anymore for anything more than 5 year time horizon.

Bitcoin is going down, wherever they're fleeing it's not that

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

#53

Post by mktk1001 »

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.

Because the implication is that underlying asset is regressing or degrading. It's very obvious, and this comment just highlights your lack of reading comprehension.

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

#54

Post by kasey_junk »

coredev_ wrote: post #39
kavalg wrote: post #24

Earlier quoted context omitted.

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 friend…

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).

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

#55

Post by thatguy0900 »

blitzar wrote: post #43
loeg wrote: post #29

Earlier quoted context omitted.

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

Iran

I'm not sure a country can survive running out of water no matter how many revolutions they put down

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

#56

Post by amluto »

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.

That’s a weird problem to have. The US has a huge bond market in part because the US has an absolutely enormous amount of debt, and the bonds are the US debt. The EU doesn’t have bloc-wide debt, for better or for worse.

As an interesting thought experiment, imagine a central bank associated with a debt-free country issuing bond-like instruments. They would set an interest rate (perhaps with no auction, because they have no actual obligation to sell a predetermined amount, although an auction could still be used), sell bonds, delete the money used to buy the bonds, and issue new money to repay them with interest when they mature. This could be used as a way to act efficiently as a reserve currency and to exert a degree of control over inflation and the economy, kind of like how the Fed does it. The bonds would likely be considered extremely secure on account of the issue being entirely debt-free.

I would be surprised if the EU did this as such, since the EU probably does not want to be in the business of competing for capital with its own members, who do have a fair amount of debt that they need to finance.

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

#58

Post by loeg »

Braxton1980 wrote: post #50
loeg wrote: post #29

Earlier quoted context omitted.

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

Almost every 1st world country has a more predictable and honest leader right now

You've answered a different question than the one I asked. I think the US will continue to pay its debts, under this president and the one who replaces him in three years.

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

#59

Post by epgui »

loeg wrote: post #37
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...

> 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, Swe…

Nothing is risk-free. But Canada is certainly more politically stable than the US.

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

#60

Post by arnonejoe »

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…

The fed would almost certainly intervene aggressively resuming large scale QE to buy up treasuries and stabilize yields.
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