E The Fed Scares Everyone About Treasuries From Time To Time. Is It A Scam?

Truth is, treasury markets have been cornered before, forcing prices up and yields down. But that was before the massive demand for bonds in the derivatives markets. That demand has not abated. Therefore, rather than the markets being cornered, the dealer banks want to push down the prices of the bonds, and raise interest rates,  just the opposite effect of cornering the market has done in the past.

So, it appears that the Fed and Greenspan and the dealer banks just want to drive the price down so it doesn't look like a bubble. They know people think the high price/low yield state of the treasury markets is a bubble. But is it? I don't think it is at all. How can it be a bubble when, as Zero Hedge said, there is simply not enough treasuries to go around as collateral? Zero Hedge goes on to say that makes it a bubble. But real demand isn't a bubble, and there is real demand for these bonds. 

So, the beat goes on. Everyone says there is a treasury bond bubble while these same people say there is a shortage of these bonds as collateral. That is why I believe the shortage of bonds is real and the lack of liquidity is fake or at least manufactured by manipulators. 

Just remember, we know that the Fed scares people with the threat of higher interest rates and then never raises the rates. They know the banks have bet on low rates. That is a pretty easy scam to spot, but the treasury bond market-as-a-bubble scam is harder to uncover.

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I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice.

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Gary Anderson 5 years ago Author's comment

Author note: According to Bloomberg, there is a potential scam pushing bond prices lower and yields higher. The yields should be lower, and there is more demand for bonds than the bankers are allowing, according to the lawsuit: www.bloomberg.com/.../primary-dealers-rigged-treasury-auctions-investor-lawsuit-says