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How do you draw the bottom line conclusion (no effect on US economy) from the scenario where U.S. growth and economic activity are stifled?
by jasonlaramburu 11y ago
How do you draw the bottom line conclusion (no effect on US economy) from the scenario where U.S. growth and economic activity are stifled?
- space_fountain 11y agoHe's saying that could happen, but it's unlikely
- roymurdock 11y agoThe worst-case scenario (large drop in demand coupled with large increase in supply of US treasuries) would probably only be triggered if China dumped a lot of treasuries on the market at once. Say, for argument's sake, 50% of their holdings in one week. This would signal US treasury weakness and would flood the market with a ton of extra US treasuries. They are currently selling treasuries off at the rate of ~1% of their total holdings per month. So I assume that fear over an uncertain stock market + investors looking for a good opportunity to pick up cheap US treasuries will provide enough demand to soak up the new supply of treasuries that are trickling into the market.