Bond traders applaud Obama's deficit proposals

Anything that improves the credit of the borrower or lowers the real rate of return (inflation, currency depreciation) would be applauded. Seems like a salient point to make.

...and yet the Street did NOT applaud Ryan's budget in the same way. Most Wall Street economists saw through the make believe assumptions.

Both plans are vague, however.

The article in jason't post was written before Obama's speech. Prices have since dropped and the 10-year yield is even lower than it was when this article was written.

So much for jason's argument- fail.

correction- meant to say higher, not lower.

licDope--10 years yield 3.41 right now, the low of the week---you trading martian treasuries??

LICcomm's trading moronian treasures, as always.

Sure, Erskine Bowles, the commission's Democratic chair, and Alan Simpson, the Republican, made some nice public statement about Obama's deficit-reduction plan after they met with him yesterday -- one day after the president unveiled his scheme to miraculously cut $4 trillion without reining in the looming catastrophes of Medicare and other entitlements. But people I spoke to in corporate America got a more unvarnished reaction in private from the debt-committee chieftains.

"What these guys can't understand is how Obama can ask them to come up with something, and then he doesn't listen to what they proposed," a Wall Street executive who knows both men well told me a few hours after the president's address on Wednesday.

More: "Erskine and Alan have been working both sides of the aisle trying to get people interested -- and then the guy who appointed them basically ignores what they said."

Say what you want about Bowles/Simpson's solutions -- living in high-tax New York, I was offended when Simpson said I needed to "sacrifice" more with higher taxes to fix the nation's fiscal mess. But the commission clearly saw the problem right: The huge explosion in spending on such entitlements as Medicare is as much a threat to our economy as our reliance on Mideast oil; we need to find a way to pay for those programs or cut them down to size.

The Republicans were willing to listen to them: Rep. Paul Ryan's plan, released last week, follows the commission in proposing major tax reform -- closing loopholes, lowering rates and using some of the savings to balance the federal books.

Yet the president appears to forget

he ever appointed a bipartisan commission to deal with the nation's fiscal issues. In fact, his tone Wednesday was highly partisan, as if runaway spending was just a right-wing boogeyman.

Of course, his "calculations" are pure fantasy. He offered no real details as to how his $4 trillion in "cuts" might be achieved, and he stretched them out over more than a decade. Somehow, we're supposed to believe that we can afford all the big government programs already in action, not to mention ObamaCare, just by raising taxes on "millionaires and billionaires" who make $250,000 a year.

I don't believe it -- and neither, I'm told, do the people who run Obama's deficit commission.

What appears to have Bowles and Simpson most upset is that the president basically dropped all their reform ideas -- like the call to cut crippling entitlements, like Medicare, and Social Security -- while embracing the tax hikes.

Worse, Obama on Wednesday basically treated entitlements as sacred -- calling them a "fundamental commitment this country has kept for generations."

Weirder still is his attitude toward taxes. For Bowles and Simpson, tax hikes are nothing short of a necessary evil to prevent fiscal Armageddon.

But the president insists on calling everyone making over $250,000 "millionaires and billionaires" -- who, he wildly claims, have gotten "trillions of dollars of tax cuts" in recent years.

Anyway, he had to agree to extend the Bush-era tax rates last fall, when Democrats still had huge majorities in Congress. How does he figure he'll get higher taxes now? Doesn't seem to matter -- his budget still returns to his obsession with raising taxes on the so-called rich.

Simpson and Bowles have to play nice publicly. But in private, I'm told, they figure their work has been reduced to rubble by the president who appointed them. Their only real value to him was as window dressing, so he could pretend he cared about the deficit and the economy in the runup to the last Election Day.

Wonder who he'll find to be his patsies come fall 2012?

- Charles Gasparino

nice piece of crap pasty from piece of crap charlie gaspipe--

how bout that 10 year---nice rally since wed, huh?

Bond investors (trader work on the news for a daily gain. The investors are who count) will like any deal that increases their chance of getting paid back. So any serious discussion about deficit reduction, whether it be through tax increases or spending cuts, will garner a positive response IF IT SEEMS SERIOUS.

They don't care if GDP doesn't grow as fast as possible or even if it shrinks. Nor do they care if it means that grandma starves to death in an institutional nursing home. They only care that they get paid back.

"Of course, his "calculations" are pure fantasy. He offered no real details as to how his $4 trillion in "cuts" might be achieved,"

Ditto for the Ryan plan, moron. Only his had fantasy figures left and right - his Hertigage foundation assumtions would increase the number of empty homes by 4 million over the next ten years (they include homebuildign estomates), reduce unemployment to 2.8%, etc, etc. So many literally impossible assumptions.

We like anything that helps to soothe the nervous supply of existing bonds.

i want jobs and a real recovery, which leads to higher rates, a mkt not propped by the fed, and normalized trading and spreads

gotta love koch & co, how they switched the agenda from jobs to cuts

bondbasics for licdope:
for existing bonds, prices are inversely related to yields

maybe best you stick to parroting soundbites??

This from someone who thinks a policy of tax, borrow and spend will create jobs.

Thanks for showing you have zero credibility.

Next . . .

much better licdope

soundbites suit you

leave the bond stuff for thinking folks

After the media started asking question about Heirtage's 2.8% unemployment figure, they scrubbed any trace of that figure from their website. Liek that's going to help...

LICC, when you post articles, can't you cite anything NOT writen by a Murdoch "journalist"?

JUST IN: House passes Ryan Medicare coupon proposal. GOP will lose HOuse in 2012 and we shall return to Speaker Pelosi!

"Last year Germany ran a deficit of 3.3 percent of GDP; the United States more than 10; Britain similar to the US, but now embarked on a harsh austerity program. Very different, you might think. Yet as of the time of posting, US borrowing costs were within 3 basis points — .03 percentage points — of Germany, while Britain was about 20 basis points higher.

You might almost think that deficits aren’t making much difference here."

http://krugman.blogs.nytimes.com/2011/04/15/interest-rate-convergence/