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Fidelity Has Sold All US Debt Maturing in October/November (flash news/CNBC no msg)
(-: Nice fodder for CNBC. Should have bought their stock today. Most assuredly neither Fidelity, nor any other large house for that matter, has rid itself of all U.S. government debt. Some longer U.S. Treasuries are essential to managing most fixed income portfolios. (Even Price's High Yield fund holds a few). It's my understanding that longer dated government bonds are incorporated into many structured derivatives. Maturity dates are a key component in these derivatives and it's possible in-effect to get whip-sawed badly when the futures markets for these things run against you.
That's why the emphasis on maturity date here. I don't think it's the idea of "default" that has traders worried so much as how these derivative vehicles (and the specific bonds they are tied to) will react as the key date approaches. There was actually a U.S. government money market fund decades ago that ran into trouble due to these hybrids, even though no one defaulted. Prediction: (1) People who were loading up on junk bonds a few months ago will run out tomorrow and sell their U.S. government bond funds. (2) They'll regret this a month or so later when this manufactured crisis passes and bond prices recover.
Comments
Regards,
Ted
http://www.cnbc.com/id/101075950/print
That's why the emphasis on maturity date here. I don't think it's the idea of "default" that has traders worried so much as how these derivative vehicles (and the specific bonds they are tied to) will react as the key date approaches. There was actually a U.S. government money market fund decades ago that ran into trouble due to these hybrids, even though no one defaulted. Prediction: (1) People who were loading up on junk bonds a few months ago will run out tomorrow and sell their U.S. government bond funds. (2) They'll regret this a month or so later when this manufactured crisis passes and bond prices recover.
http://www.zerohedge.com/news/2013-10-10/hong-kong-raises-haircut-treasury-bill-collateral-over-debt-default-dears
In case anyone missed it, here's the link to your own outrageously funny post:
CNBC & Jamie