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Q1 2006

Foreigners reduce support for US Treasuries

Demand for Bonds: US Market: Q1 2006

Although foreign investors continue to be the largest purchasers of most types of US bonds, this sector showed less interest in treasuries than in the past, shifting assets into short-term repurchase agreements in Q1 2006. If the Federal Reserve continues to push short-term interest rates upwards and if foreign investors continue to move into short-term fixed investments, such as repurchase agreements, long-term interest rates may be forced higher.

Q1 2006

Record bond issues push rates higher

Net Issuance: US Bond Markets

Net issuance of bonds into the US market in Q1 2006 surpassed prior records, forcing bond prices to fall and rates to rise.

The bond market was moved by seasonal factors, the return of Fannie Mae, and corporate demand for funds to finance stock buybacks.

Total, annualized net sales for corporate and foreign bonds, agencies, treasuries and municipal bonds reached $2.2 trillion, 70% higher than bond issuance in 2005.

Featured articles on inside pages

Stock buybacks

Stock buybacks dry up

Since 1982, US equities have been driven upwards by stock buybacks. Federal Reserve statistics show corresponding sales of stocks as executives exercised options to take advantage of manipulated prices. More ...

Securities Analysis

Intrinsic value

The target of classical security analysis is 'intrinsic value', a fuzzy concept defined as the value justified by the facts. Now, there may be too many 'facts' while prices exceed 'intrinsic value'. More ...

US Politics

President Obama and the Lincoln Bible

The Crash of 2008 put Barack Obama in the Oval Office and was the culmination of two secular financial trends. Americans now have an untested, inexperienced leader, with strange radical friends and a leftist deficit spending agenda. More ...

US equities

Do stocks offer protection against inflation?

There is a common belief that a managed, diversified portfolio of US common stocks provides protection against inflation. However, there is reason to question whether this protection currently exists.
More ...

US Bonds

Bond demand exceeds supply for a decade

Over the decade, 1995-2004, the demand for US bonds of all types has surpassed new bond issues in eight of the last ten years. This is the reason that bond prices have held firm, even in 2003, when net new issues reached almost $1.8 trillion. More ...

World Economy

Working off the US trade deficit

Foreigners hold $16.8 trillion in US financial assets as a result of selling more goods to Americans than they buy from them. Since the 'deficit' is in dollars, the US has no problem in 'paying it off'. More ...

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2010-09-07 16:04