Treasuries

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Rich or Poor, You Can’t Ignore U.S. Treasuries in Today’s Markets

U.S. Treasuries

There are a good number of investors who believe that U.S. Treasuries - notes in particular - are bad for you and even worse for your money at the moment.

Why really doesn't matter... rates might rise, deflation, a bond market bubble, there's too much debt... they're riskier than you think, goes the argument.

All of those things are, well... true. Yet, I submit U.S. Treasuries are the one investment you cannot afford to be without at the moment for three reasons.

So grab a cup of joe and let me share something with you that escapes 99% of all investors.

The "Unnatural Disaster" Ravaging Global Markets

The tide is turning for crude oil prices. Following some nice recent gains and despite a dip on Tuesday, the market currently remains at just below $60 a barrel for West Texas Intermediate (WTI) crude oil futures in New York. The recent rise in prices would seem to be just what the smaller operators in the U.S. need to avoid a sector meltdown. A few months back, when prices were pushing lows of $40 a barrel, there was widespread talk of a wave of bankruptcies coming in the oil patch. The picture is now better, given a recovery in crude prices.
The tide is turning for crude oil prices.

Following some nice recent gains and despite a dip on Tuesday, the market currently remains at just below $60 a barrel for West Texas Intermediate (WTI) crude oil futures in New York.

The recent rise in prices would seem to be just what the smaller operators in the U.S. need to avoid a sector meltdown.

A few months back, when prices were pushing lows of $40 a barrel, there was widespread talk of a wave of bankruptcies coming in the oil patch. The picture is now better, given a recovery in crude prices.

But there is another shoe about to fall in the ongoing fight by smaller companies to survive. Here's my take on the disaster that's brewing - and the opportunities it may bring...

Why the U.S. Treasury Market Is No Longer Safe

US Treasury market

The U.S. Treasury market is worth more than $12 trillion. It's believed to be the safest market in the world. Whenever there's a panic and the markets freak out, investors dump stocks and buy Treasuries. That's the so-called "flight to quality."

However, back on Oct. 15, when the last flight to quality exploded, the U.S. Treasury market failed to do what it had always done.

It failed to be safe - and nobody's talking about it...

The Shift Toward De-globalization is Bullish for Gold

You can see signs of de-globalization everywhere. Just look at the intense shareholder opposition to Prudential PLC's proposed takeover of the Asian operations of American International Group Inc. (NYSE: AIG).

And that's just one example.

The market scare on news that North Korea had, indeed, sunk a South Korean Naval vessel was another. The "flight to safety" in U.S. Treasuries - sparked by the increasing concern about the future of the euro and the viability of Greek government finances - is a third.

All over the world, little by little, the apparently inexorable tide of "globalization" - making the world "flat" in the words of Thomas L. Friedman - is retreating.  If a full-scale financial crisis breaks out in the next few months, that retreat will become a rout. And the world will become de-globalized.



For the warning signs of de-globalization, please read on...

U.S. Treasury Bonds: The Not-So-Safe "Safe Haven"

In the last few weeks, international investors spooked by the budget crisis in Greece and the turmoil in southern Europe have been flocking into the U.S. Treasury bond market as a "safe haven."

The huge resulting funds flows have pushed the 10-year Treasury bond yield down to 3.16%, very little above its level during the crisis of October 2008. To a rational investor, this is extremely peculiar: After all, what on earth is safe about the "haven" of long-term U.S. Treasury bonds?

To learn about the potential investment dangers posed by U.S. government debt, please read on...

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Money Morning Mailbag: Can Anyone Fix the Fiscal Mess?

As opinions continue to pour in to the Money Morning mailbag, something is becoming quite clear: People are getting fed up with the national and global "fiscal mess." The pessimists outweigh the optimists and are tired of standing idly by watching ineffective financial policies.

As the United States continues to spar with China on currency issues and Greece has yet to make substantial strides toward recovery, U.S. taxpayers and investors fear that our country is headed for worse economic times. Despite the fact there's a financial reform bill on the horizon, there is overwhelming doubt that the government will implement as much of a financial system overhaul that's needed. 

Here are some of the more passionate views on the government mistakes that caused a U.S. financial quagmire, threatening the country's future stability.

How to Protect Yourself - And Even Profit - if Foreign Creditors "Strike" U.S. Treasuries

The odds are good that China won't dump its holdings of U.S. Treasuries anytime soon. But by substantially reducing its purchases of U.S. debt - or halting them completely in the form of a buyers' strike - the Red Dragon could absolutely shatter the myth that it is the U.S. Federal Reserve that controls U.S. interest rates.

And that could also crater the bond market in the process.

To find out how you could protect yourself if foreign creditors ditch the dollar read on...

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How the Looming "Debt Bomb" Will Crush the Dollar

The U.S. dollar has staged a short term rally against other currencies. But the U.S. is already gripped by hidden inflation and must refinance a mountain of short-term debt in just months.

Here's how to protect - and grow - your money, even as the debt bomb explodes...

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The Chinese Are Selling Treasuries - So What Are They Buying?

In the monthly U.S. Treasury report this week, it was announced that China had sold $34.2 billion of Treasuries in December (or allowed short-term ones to run off), making Japan once again the largest holder of U.S. Treasuries.

The battle between China and Japan for the title of largest holder of this dubious asset is not very interesting. What's more interesting is the question of where China is instead opting to invest. After all, $34.2 billion is a fair chunk of change, and China's overall reserves are growing - not shrinking - and now total $2.4 trillion.

The People's Bank of China usually keeps its holdings a carefully guarded secret, much more so than for most central banks - our knowledge of its holdings of Treasuries comes from U.S. data, not from China. We do, however, have some evidence about the Chinese government's investment thinking, thanks to the holdings of China Investment Corp., the country's $200 billion sovereign wealth fund.

To discover the details of China’s global investments, please read on...

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Treasuries May be no Safe Haven in This Stock Market Storm

By Martin Hutchinson Contributing Editor For the last couple of years, every time problems have emerged in the stock market, investors have rushed into U.S. Treasury Bonds, assuming they're a catchall "safe haven" against stock-market storms. But there are signs that at least long-term Treasuries may no longer provide that safe haven - and actually […]

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