by Filip De Mott at Markets Insider
- US Treasurys have long been the go-to asset when uncertainty, fear, and panic send investors looking for safety.
- But that reputation has take major hits lately amid a historic bond sell-off and rising default fears.
- Financial markets have been engaged in a growing debate over the risks that lurk in Treasurys, with prominent voices raising doubts.
US Treasurys have long been the go-to asset when uncertainty, fear, and full-blown panic send investors looking for safety — but that reputation has take major hits lately.
Financial markets have been engaged in a growing debate over the risks that lurk in Treasurys, with prominent voices raising doubts. On Friday, Moody’s lowered the US credit outlook to “negative,” signaling that a downgrade is possible in the future.
That comes as massive deficits have sent debt soaring, while the historic sell-off in US bonds, triggered by the Federal Reserve’s rate hikes, has highlighted that prices are vulnerable too.
“You have people talking about bitcoin, about equity being the ‘safe asset’ because they’ve lost confidence in government bonds being the safe assets because of the nature of this interest-rate risk,” economist Mohamed El-Erian told CNBC last month…
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