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.
If you’re a member of your local public radio station, we thank you — because your support helps those stations keep programs like Marketplace on the air. But for Marketplace to continue to grow, we need additional investment from those who care most about what we do: superfans like you.
Your donation — as little as $5 — helps us create more content that matters to you and your community, and to reach more people where they are – whether that’s radio, podcasts or online.
When you contribute directly to Marketplace, you become a partner in that mission: someone who understands that when we all get smarter, everybody wins.