Friday, May 8, 2009

The Debts of the Spenders: Bond Traders Stress Test US Treasury Yields

There is a price for everything. Yesterday's much hyped stress tests for US banks passed (more or less) w/flying colors as judged by the equity market's reaction. However, the cost of expanding corporate welfare was priced into the 30 year auction which ended on a poor note.

Is the equity rally sustainable? Can the US govt maintain the delicate balancing act of keeping borrowing costs low?

Yesterday's ECB and BOE announcements of bond market intervention bring renewed pressure on the US to follow similar moves. Perhaps next week.


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