Former Federal Reserve Chairman Alan Greenspan warns that the spike in Treasury yields is a “canary in the mine” that may foreshadow higher interest rates, as investors have avoided three major Treasury auctions this week.
Prices of U.S. government debt fell on Thursday following a weak auction of $32 billion in seven-year Treasury notes. The high yield on the auction came in at 3.37 percent, above the market's expectations, according to market data.
Thursday's auction capped a week of $118 billion in new supply which attracted dismal investor interest. The government has been auctioning a steady stream of bonds for months to fund its economic stimulus efforts.
The higher yields indicate investors’ fears about a “huge overhang of federal debt which we have never seen before,” Greenspan told Bloomberg. “I’m very much concerned about the fiscal situation,” he said. (more)
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