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I would not want to be holding US debt, this election cycle.

by Aelinsaar 10y ago

flubert 10y ago
What manner are you short Treasuries? Any recommendations?
toomuchtodo 10y ago
Can you name a safer financial instrument than US debt? Its definitely not fiat currency nor metals (incl. gold).
- dragonwriter 10y ago
  > Can you name a safer financial instrument than US debt? Its definitely not fiat currency I dunno. I mean, US government debt is conceptually subject to both US monetary risks (the same as US dollars) and US government fiscal risks, so US government (dollar-denominated) debt must always be (even if only infinitesimally) less safe than at least one fiat currency, to wit, the US dollar.
  - brianwawok 10y ago
    In what case would tbonds go down but not the dollar?
- eru 10y ago
  Depends on what risks you are looking for. Singapore debt might be in sounder management, but of course the country is smaller; so more of a playball.
  - d_t_w 10y ago
    Gilts have historically been there-or-thereabouts in terms of interest rate with respect to US Bonds. Certainly in the last decade they are near indistinguishable. https://bankunderground.co.uk/2015/08/28/the-special-relationship-uk-and-us-bond-yields/ https://bankunderground.co.uk/2015/08/28/the-special-relatio...
hueving 10y ago
If you think you know something about the value of treasuries in the future there is a fortune for you to make in the financial market.
- dragonwriter 10y ago
  > If you think you know something about the value of treasuries in the future there is a fortune for you to make in the financial market. No, if you actually know something about the value of treasuries in the future, there is a fortune for you to make in the financial market. If you merely think you know something about the value of treasuries in the future, that's a different story. But, anyway, the grandparent post wasn't expressing knowing something about the value of treasuries in the future, they were expressing a perception of risk, which is exactly the opposite.
  - eru 10y ago
    Oh, if you know that risk is going up, you can buy (long term) credit default protection now, and sell it once the market recognizes the risk, too. (You don't need an actual default for the credit default protection to appreciate in value, just more of a perception that the risk of a default has gone up.)
    - fiatmoney 10y ago
      Buying credit default swaps on US treasuries is like buying suntan lotion in anticipation of a nuclear attack. No counterparty can credibly insure such an event & the money you would make in a cash-up-front variant would be incredibly likely to become worthless.
      - eru 10y ago
        Oh, I don't suggest holding to maturity. I suggest selling when the market's perception of risk has crept up to the level one feels justified by fundamentals. See also http://www.bloomberg.com/view/articles/2013-09-26/why-would-anyone-buy-credit-default-swaps-on-the-u-s- http://www.bloomberg.com/view/articles/2013-09-26/why-would-...

I would not want to be holding US debt, this election cycle.

flubert 10y ago

What manner are you short Treasuries? Any recommendations?

toomuchtodo 10y ago

Can you name a safer financial instrument than US debt? Its definitely not fiat currency nor metals (incl. gold).

dragonwriter 10y ago
> Can you name a safer financial instrument than US debt? Its definitely not fiat currency I dunno. I mean, US government debt is conceptually subject to both US monetary risks (the same as US dollars) and US government fiscal risks, so US government (dollar-denominated) debt must always be (even if only infinitesimally) less safe than at least one fiat currency, to wit, the US dollar.
- brianwawok 10y ago
  In what case would tbonds go down but not the dollar?
eru 10y ago
Depends on what risks you are looking for. Singapore debt might be in sounder management, but of course the country is smaller; so more of a playball.
- d_t_w 10y ago
  Gilts have historically been there-or-thereabouts in terms of interest rate with respect to US Bonds. Certainly in the last decade they are near indistinguishable. https://bankunderground.co.uk/2015/08/28/the-special-relationship-uk-and-us-bond-yields/ https://bankunderground.co.uk/2015/08/28/the-special-relatio...

hueving 10y ago

If you think you know something about the value of treasuries in the future there is a fortune for you to make in the financial market.

dragonwriter 10y ago
> If you think you know something about the value of treasuries in the future there is a fortune for you to make in the financial market. No, if you actually know something about the value of treasuries in the future, there is a fortune for you to make in the financial market. If you merely think you know something about the value of treasuries in the future, that's a different story. But, anyway, the grandparent post wasn't expressing knowing something about the value of treasuries in the future, they were expressing a perception of risk, which is exactly the opposite.
- eru 10y ago
  Oh, if you know that risk is going up, you can buy (long term) credit default protection now, and sell it once the market recognizes the risk, too. (You don't need an actual default for the credit default protection to appreciate in value, just more of a perception that the risk of a default has gone up.)
  - fiatmoney 10y ago
    Buying credit default swaps on US treasuries is like buying suntan lotion in anticipation of a nuclear attack. No counterparty can credibly insure such an event & the money you would make in a cash-up-front variant would be incredibly likely to become worthless.
    - eru 10y ago
      Oh, I don't suggest holding to maturity. I suggest selling when the market's perception of risk has crept up to the level one feels justified by fundamentals. See also http://www.bloomberg.com/view/articles/2013-09-26/why-would-anyone-buy-credit-default-swaps-on-the-u-s- http://www.bloomberg.com/view/articles/2013-09-26/why-would-...