U.S. Paring Debt Sales Vindicates Anti-Austerity Since 2008
By Cordell Eddings and Jeff Marshall - Jul 29, 2013
For the first time in three years, the U.S. Treasury will announce plans to begin reducing debt sales in a victory for stimulus over austerity, the majority of Wall Street’s biggest bond dealers say.
Government sales will be cut by $40 billion to $100 billion during the next year when the Treasury announces its quarterly funding needs July 31, a survey of the 21 primary dealers that are obligated to bid at U.S. bond auctions shows. About two-thirds of those responding, including Goldman Sachs Group Inc. and JPMorgan Chase & Co., see reductions this year, possibly as soon as next month. The U.S. issued $2.153 trillion in 2012.
Smaller sales may contain yields as Federal Reserve Chairman Ben S. Bernanke prepares to reduce the $85 billion a month of bond buying that has supported the economy. The budget deficit has fallen to about half what it was in 2009 and a Bloomberg survey shows gross domestic product may grow next year at the fastest pace since 2006. By contrast, the euro area’s economy is shrinking as governments pursue austerity measures in the face of debt turmoil.
“It’s clear the U.S. approach of stimulate first, get the economy running and work on the deficit later has turned out much better than a crackdown of budget deficits now and assuming it will all work out in the long run,” Robert Tipp, chief investment strategist in Newark, New Jersey, for Prudential Financial Inc.’s fixed-income division, said in a telephone interview on July 23 . The group oversees $400 billion.
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http://www.bloomberg.com/news/2013-07-29/u-s-paring-debt-sales-vindicates-anti-austerity-since-2008-1-.html
