2009-04-27 CREDIT

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IG On-the-run Spreads (Apr 27)


IG6 Spreads (Apr 27)


IG7 Spreads (Apr 27)


IG8 Spreads (Apr 27)


IG9 Spreads (Apr 27)


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5 Responses to 2009-04-27 CREDIT

  1. hooverprintingpresses says:

    The world is running out of capital. We cannot take it for granted that the global bond markets will prove deep enough to fund the $6 trillion or so needed for the Obama fiscal package, US-European bank bail-outs, and ballooning deficits almost everywhere.

    Unless this capital is forthcoming, a clutch of countries will prove unable to roll over their debts at a bearable cost. Those that cannot print money to tide them through, either because they no longer have a national currency (Ireland, Club Med), or because they borrowed abroad (East Europe), run the biggest risk of default.

    Traders already whisper that some governments are buying their own debt through proxies at bond auctions to keep up illusions – not to be confused with transparent buying by central banks under quantitative easing. This cannot continue for long.

    Commerzbank said every European bond auction is turning into an “event risk”. Britain too finds itself some way down the AAA pecking order as it tries to sell £220bn of Gilts this year to irascible investors, astonished by 5pc deficits into the middle of the next decade.

    US hedge fund Hayman Advisers is betting on the biggest wave of state bankruptcies and restructurings since 1934. The worst profiles are almost all in Europe – the epicentre of leverage, and denial. As the IMF said last week, Europe’s banks have written down 17pc of their losses – American banks have swallowed half.

    “We have spent a good part of six months combing through the world’s sovereign balance sheets to understand how much leverage we are dealing with. The results are shocking,” said Hayman’s Kyle Bass.

    It looked easy for Western governments during the credit bubble, when China, Russia, emerging Asia, and petro-powers were accumulating $1.3 trillion a year in reserves, recycling this wealth back into US Treasuries and agency debt, or European bonds.

    The tap has been turned off. These countries have become net sellers. Central bank holdings have fallen by $248bn to $6.7 trillion over the last six months. The oil crash has forced both Russia and Venezuela to slash reserves by a third. China let slip last week that it would use more of its $40bn monthly surplus to shore up growth at home and invest in harder assets – perhaps mining companies.



    Warren Mosler Reply:

    capital is endogenous. i suggest you re read the mandatory readings on this site


  2. Captain CraZ says:

    The US government is being ridiculed internationally, even with all her promises and backings, the banks and other market participants don’t feel secure and are worried about transparency, what more proof do you need that the modern welfare state is not a good “paradigm” as you all so often like to say?


    Look at this, we have homeless starving kids all over the country, but banks are demolishing newly built homes instead of pay taxes to local government coffers – talk about “creative destruction” – what a disgrace! It is an outrage at the homeless vets I see – RAMBO types who could really be given a chance in life with a nice mcmansion to house them while they plot how to get their state to succed from the union!


  3. jcmccutcheon says:

    Warren, looks like the spreads are kind of basing at a high level?
    What is it going to take for these spreads to come down?


    Warren Mosler Reply:

    more signs of economic improvement and a reduced perception of certain oblivian.


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