Treasurys: The Absurdity of Maximum Price and Maximum Supply
- Joshua M Brown
- June 26th, 2012
Jeff Nielsen has window-shattering post up over at TheStreet.com on the absurdity of the current Treasury market...
The U.S. Treasury market is the biggest financial mystery today.
Much like the proverbial "lead zeppelin" defies the laws of physics, the current status of the Treasury market defies all of our financial fundamentals. It is a market that cannot exist, and yet it does.
Previously, my own writing has focused upon one particular aspect of this absurdity: the highest prices for U.S. Treasuries at a time of maximum supply. This, in itself, is an absolute financial contradiction. The highest supply in history directly implies the lowest prices in history, for every market in the world -- except U.S. Treasuries.
But that is merely Act One of this Theater of the Absurd. These maximum prices are occurring at the point in history where the U.S. has never been less solvent. This also directly implies that U.S. Treasuries should be fetching the lowest prices in history -- as is occurring with their deadbeat counterparts in Europe.
No one has been able to explain this ultimate financial contradiction...
UPDATED: A response to Jeff with an answer to his conspiracy theory from none other than Joe "The Stalwart" Weisenthal over at BI: Here
hat tip Ken S
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.