Since the price of Treasury bonds fell during the second quarter of 2004, we can infer that the principal sellers (the U.S. Treasury and Broker-Dealers) were more motivated than the principal buyers (Foreign Investors and Households).

Broker-dealers were selling Treasuries in order to unwind earlier repurchase deals (positions in Treasury bonds financed by borrowed money). The U.S. Treasury sold bonds to cover the fiscal deficit caused by the War on Terror and higher levels of government spending on domestic programs.

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