Monday, July 18, 2011

Why are Treasuries up?

Baseline scenario asks why short and medium term Treasuries up or flat if debt is the concern.
Start with the obvious, we are not borrowing. Then follow up, if we fail to agree on a budget, then the conclusion is that we are still not borrowing. The closer we get to deadline, the shorter will be the extension, so further conclude will borrow less, shorter term.

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