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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

#61
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…

Not "worth to invest in," just the higher criteria GP asked for: "a more politically stable nation state." It has to be strictly more stable than the US, not just investable.

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

#63
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.

[American perspective] In February I looked toward Euro bond markets as a safe haven for increasing Treasury yields, but the choices did not look good. For starters it appears to be impossible to even trade in foreign bonds with traditional brokerage accounts in the United States (hosted by E-trade, Morgan Stanley, Charles Schwab, etc).

Additionally, French bonds, while likely less-correlated with US Treasuries than other instruments, suffer from its own government having high debt levels; it's not a suitable safe-haven asset. Swiss and German bonds appear to be obvious alternatives. However, Swiss and German bonds' interest rates are low and in practice are little different than holding cash.

While gold appreciated in the short term, it is not simply inversely correlated with the value of the US Dollar. Its volatility is also driven by investors mitigating strict currency controls, mining productivity, and central bank activity. An unrelated downturn in one market could lead to a sell-off and wipe out gains. Gold also has no yield. Personally I think it's useful only in its physical form as a hedge for medium-term catastrophic events. Even then, a stockpile of food and clean water is likely far more valuable, if not substantially more difficult to store and maintain.

I ended up giving up, learning to love the S&P 500, and white-knuckling it ahead. Of the investable markets, the US one still generates the highest returns. (Chinese GDP growth is higher but its equities have low returns compared with other markets, due to political risk.)

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

#65
post #29

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?

[deleted]

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

#66
post #59
post #37

Earlier quoted context omitted.

> 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.

Canada is more internally stable, but is less externally stable, given that invasion and occupation is on the table.

Canada needs to pursue further armament (Carney is pursuing a doubling of its defense budget) and training in asymmetrical warfare.

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

#67

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 has importance beyond that someone else bought the bonds. It also suggests they will not be buyers in the future. If they represent the beginning of a trend and Europe stops buying US bonds, that will be a serious blow to the US economy.

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

#68
post #59
post #37

Earlier quoted context omitted.

> 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.

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 quibble with "certainly" and "more" politically stable as compared with the US.

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

#69
post #58

Earlier quoted context omitted.

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.

This president has publicly mulled not paying its debts.

It's time to stop magical, wishful thinking about how you want the world to be, and deal with the world as it is.

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

#70

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…

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

we've played this game before
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