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T-notes on sale to help fund bailout

Seal of the U.S. Treasury Department

TEXT OF STORY

Scott Jagow: The Treasury Department will auction off some two-year notes today. Treasuries are considered a safe place to stash your money, usually. But with this $700 billion bailout ahead, are T-notes really gonna be a safe investment? Jeremy Hobson looks into that.


Jeremy Hobson: Investors rely on government bonds to generate a small profit without much risk. But today, it's the government that's relying on investors to finance its bailout plan, says Jim Bianco of Bianco Research.

Jim Bianco: They need to get $700 billion to fund this. They're not raising taxes to do it. They're going to borrow the money. And they're going to borrow the money in the treasury market.

Bianco says foreign buyers may be more hesitant to buy treasuries now because of increasing worries about a drop in the value of the dollar. TJ Marta is a fixed-income strategist at RBC Capital Markets. He says investors are also worried about the government stumbling down the road.

TJ Marta: There's a significantly greater default risk priced into U.S. treasuries than for any of the other G-7 countries so that's one worry. The other worry is the prospect that the U.S. government is going to have to inflate its way out of this debt.

The Treasury Department will auction off another $24 billion in five-year notes tomorrow.

In New York, I'm Jeremy Hobson for Marketplace.

About the author

Jeremy Hobson is host of Marketplace Morning Report, where he looks at business news from a global perspective to prepare listeners for the day ahead.
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I've been buying 1st Mortgage Notes though my Self-Directed IRA for years and receiving over 14% with an average of 50% LTV. Why does the media ignore these topics, hard money and self-directed IRA's? I've been working with both for over 20 years and rarely do I talk to anyone who knows much if anything about either.

Can anyone buy T-notes? Just wondering . . . if so, as an ordinary citizen, would buying T-notes be a vote of confidence in our system, or just plain foolish?

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