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…
Swedish Alecta has sold off an estimated $8B of US Treasury Bonds
61–70 of 192 posts
Re: Swedish Alecta has sold off an estimated $8B of US Treasury Bonds
#62is America great again yet?
Re: Swedish Alecta has sold off an estimated $8B of US Treasury Bonds
#63The 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.
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
#64Re: Swedish Alecta has sold off an estimated $8B of US Treasury Bonds
#65Earlier 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?
Re: Swedish Alecta has sold off an estimated $8B of US Treasury Bonds
#66Earlier 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 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
#67An 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.
Re: Swedish Alecta has sold off an estimated $8B of US Treasury Bonds
#68Earlier 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.
Re: Swedish Alecta has sold off an estimated $8B of US Treasury Bonds
#69Earlier 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.
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
#70Earlier 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.