The Outlook for Treasuries
The last two days have seen a sizeable selloff in U.S. Treasury bonds. Is this the pause that refreshes rates, or is it the beginning of a larger backup?
I believe risk assets won't be able to sustain a rally until Greece actually (and inevitably) defaults. As I've written before, only when this happens will we start getting clarity about banks' capital and their ability to withstand a Greek default. Then we will know whether the Europeans can fence in Greece and prevent other sovereigns from suffering a liquidity crunch. The European Central Bank took a step in the right direction by considering the European Financial Stability Facility (EFSF) to bolster bank capital, but the market is still waiting for the main event: Greek default....588 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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