[OPE] Fiscal issues

From: Jurriaan Bendien <jurriaanbendien@online.nl>
Date: Wed Dec 08 2010 - 16:03:38 EST

(They're now concluding what was obvious from the start: the cost of capital
goes up - JB).

US Treasuries hit by biggest sell-off since Lehman
By Richard Milne in London and Michael Mackenzie in New York

FT December 8, 2010

US Treasuries suffered their biggest two-day sell-off since the collapse of
Lehman Brothers, following a torrid month that has seen borrowing costs for
western governments soar. Germany, Japan and the US have all seen their
benchmark market interest rates rise by more than a quarter in the past
month while the UK's has risen by nearly a fifth.

"You could argue that we are at a new stage where the global cost of capital
goes higher and higher," said Steven Major, global head of fixed income
research at HSBC. (...) The primary explanation is that growth expectations
have increased because of better economic data and the "second stimulus"
provided by the US government. But others argue it could be due to fears
that the US Federal Reserve will not follow through on planned asset
purchases or because of higher government deficits. "It is probably all
three," said Mr Major.

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