T-notes on sale to help fund bailout
Share Now on:
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.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.
You make our
Support nonprofit news you love with a gift today.