Demand for Swaps Collateral Could Bolster Bonds

Demand for Swaps Collateral Could Bolster Bonds

This was an important article. There is much talk about shortages of pristine, top collateral for the derivatives markets. The pristine collateral used are treasury bonds. The need for them in this usage alone is estimated to be 800 billion to 4 trillion dollars. Since there are 12 trillion dollars of treasury bonds in circulation, this is a massive addition to demand and will force the long bond rate down and the price of the bonds up. 

See also my articles at Talkmarkets on the subject:

Some of the above articles have the symbol TLT attached. Read those and all that speak about bonds. Also connected are articles dealing with the zero lower bound, negative interest rates and a cashless society.


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