Articolo con alcuni dati interessanti sull'economia USA. Concordo sul fatto che Geithner e l'amministrazione Obama in generale stiano facendo un buon lavoro, la stessa cosa purtroppo non si può dire sulla precedente amministrazione Bush
In-Geithner-We-Trust Bond Market Gets Lowest Yield (Update1)
By Susanne Walker
Nov. 30 (Bloomberg) -- Less than a week after deflecting calls for his resignation,
Timothy Geithner sold bonds on behalf of U.S. taxpayers at the lowest yields on record in a show of confidence in the Treasury Secretary’s policies.
Even as the nation’s debt increased by $1.15 trillion this year to $6.95 trillion in October, the government’s interest expense under Geithner dropped 15 percent, the biggest decrease since before 1989, according to data compiled by Bloomberg. The
Treasury auctioned $44 billion of two-year notes Nov. 23 at a yield of 0.802 percent, the lowest on record.
Rising demand shows investors believe Geithner, 48, is striking a balance between policies to promote growth and the borrowing needed to finance a $1 trillion deficit. The economy will likely expand 2.6 percent in 2010, after the government and Federal Reserve lent, spent or committed almost $12 trillion to keep financial markets from collapsing, according to the median estimate of 63 analysts surveyed by Bloomberg. That’s in line with average growth of 2.63 percent from 2002 through 2007.
“There have been many criticisms of him, but he’s done a good job,” said
Tsutomu Komiya, who invests in Treasuries for Tokyo-based Daiwa Asset Management Co., which oversees $77 billion.
“He brought stability to the financial markets. We can’t help but invest in Treasuries because of their safety and liquidity.”
Falling Yields
The yield on the benchmark 3.375 percent note due November 2019 fell 16 basis points, or 0.16 percentage point, last week to 3.21 percent, compared with the average of 7.31 percent since 1969 for bonds due in 10 years. The yield was 3.23 percent today as of 11:31 a.m. in Tokyo.
Interest rates are low even though the deficit exceeds $1 trillion for the first time.
When the
gap peaked in the first half of the decade at $412.8 billion in 2004 under Treasury Secretary
John Snow, yields on 10-year notes, which serve as a benchmark for everything from mortgage rates to corporate bonds, averaged 4.26 percent. When it topped out in the previous decade at $290.4 billion in 1992 under
Lloyd Bentsen, yields averaged 7 percent.
Geithner inherited an economy mired in the first global recession since World War II and financial markets frozen from the collapse of subprime mortgages that began in 2007 under his predecessor,
Henry Paulson.
He’s overseen 71 bond auctions this year while at the same time reducing interest expense by $67.8 billion to $383.4 billion from $451.2 billion.
‘Balanced and Sustainable’
“We must lay a foundation for a more balanced and sustainable pattern of future growth, both within and across countries,” Geithner said Sept. 5 in a statement at the conclusion of a meeting of Group of 20 finance ministers and central bankers in London.
“In the United States, we are going through a necessary and fundamentally healthy transition, raising savings rates and borrowing less from the rest of the world.”
Treasury officials declined to make Geithner, who started working for the government in 1988, available for comment.
Low market interest rates have allowed U.S. companies to raise a record $1.178 trillion in corporate bonds, Bloomberg data show.
Fewer banks tightened lending standards in the third quarter as the economy grew for the first time in more than a year, a Federal Reserve survey showed. The
Standard & Poor’s 500 Index has rallied 64 percent from its low for the year in March.
After the worst first-half for the Treasury market since at least 1978, government debt has returned 3.4 percent since June, including reinvested interest, cutting the annual loss to 1.2 percent, according to Bank of America Corp.’s Merrill Lynch U.S. Treasury Master Index.
‘Benefit of the Doubt’
For every $1 of debt sold by the Treasury this year investors put in bids for $2.59, up from $2.19 of bids at the 46 offerings at this point in 2008.
“You have to give him the benefit of the doubt in terms of the difficulties he’s had to deal with,” said
Jeffrey Caughron, an associate partner in Oklahoma City at Baker Group Ltd., which advises community banks investing $20 billion. “I’m hard pressed to think of a previous Treasury Secretary who has had to contend with the problems he’s had to face.”
Geithner graduated from Dartmouth College in Hanover, New Hampshire, in 1983 with a bachelor’s degree in government and Asian studies, specializing in Japanese and Chinese. He has a Master of Arts in international economics from Johns Hopkins University in Baltimore. Before taking over the New York Fed in 2003, he spent most of the previous 18 years working in the nation’s capital, first at Kissinger Associates, then at the Treasury and finally at the International Monetary Fund.
Fed Help
At the Fed, Geithner was among the top officials overseeing efforts to stem the worst financial crisis since the Great Depression. He helped lead the U.S. takeover of
American International Group Inc. and the sale of Bear Stearns Cos. to
JPMorgan Chase & Co. All the firms are based in New York.
He also worked with Fed Chairman
Ben S. Bernanke and Paulson in deciding to let Lehman Brothers Holdings Inc. file for bankruptcy, a decision that caused credit markets to freeze in September, 2008.
Low yields also reflect monetary policy, which is outside the control of the Treasury. Bernanke has kept the
target interest rate for overnight loans between banks at a range of zero to 0.25 percent since December.
After their last meeting on Nov. 4, central bankers reiterated a
pledge to keep benchmark interest rates near zero for “an extended period” and specified that policy will stay unchanged as long as inflation expectations are stable and unemployment fails to decline, providing bond investors an incentive to buy.
Republican Critics
For Representative
Kevin Brady of Texas, the senior House Republican on the Joint Economic Committee, rising demand for bonds reflects the state of the economy and the inability of the Obama administration to turn it around. Former Connecticut Republican congressman
Rob Simmons, who is seeking to unseat Democratic incumbent and Senate Banking Committee Chairman
Christopher Dodd in the 2010 election, said earlier this month that Geithner should resign over his role in the AIG bailout.
Simmons cited a Nov. 16 report by the Troubled Assets Relief Program special inspector general that faulted the New York Fed, with Geithner at its helm, for making “limited efforts” to protect taxpayer funds during the rescue of AIG.
The Labor Department said Nov. 6 that unemployment rose to 10.2 percent last month, the highest level since 1983, while a Fed report the same day showed
consumer credit fell in September for the eighth straight time, the longest decline on record. Obama’s job approval rating dropped below 50 percent this month from 66 percent in January, Gallup polls with a margin of error of plus or minus 2 percentage points show.
Geithner Blames Bush
“For the sake of our jobs, will you step down from your post?” Brady asked Geithner at a hearing of Congress’ Joint Economic Committee on Nov. 19. “The public has lost all confidence in your ability to do the job,” and that “is reflecting on your president,” he said.
Geithner dismissed the suggestion and blamed policies of President
George W. Bush for the financial crisis. Republicans “gave this president an economy falling off the cliff,” he told Brady. “I can’t take responsibility for the legacy of crises you bequeathed the country.”
Lower Treasury yields have helped to push down borrowing costs for companies, local governments and consumers.
Yields on corporate bonds fell to 5.64 percent last week from more than 10 percent in March and the lowest since 2005, according to Merrill Lynch’s U.S. corporate and High Yield Master Index.
Rates for 30-year fixed mortgages averaged 4.78 percent in the week ended Nov. 26, down from as high as 6.63 percent last year, according to McLean, Virginia-based Freddie Mac. The rate was 5.1 percent in the week ending Jan. 29.
Foreign Demand
After contracting 5.4 percent in the last three months of 2008, gross domestic product expanded at a 2.8 percent annual rate in the third quarter, the highest since September 2007.
Net buying of American long-term equities, notes and bonds by foreign investors totaled $40.7 billion in September, up from $34.2 billion in August, the Treasury said Nov. 17.
Demand from foreign investors, who own about 50 percent of marketable U.S. debt, shows no signs of abating.
Indirect bidders, a group of investors that includes foreign
central banks, purchased 45 percent of the $1.917 trillion in U.S. notes and bonds sold this year through Nov. 25, compared with 29 percent a year ago, according to Fed auction data compiled by Bloomberg News.
Dollar No Deterrent
Demand for U.S. assets is climbing even as the dollar tumbles. Intercontinental Exchange Inc.’s U.S.
Dollar Index, which tracks the currency’s performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, has dropped 16 percent from its high of the year in March to 74.996 on Nov. 27.
Banks have increased purchases 26 percent, borrowing at virtually zero percent and buying higher-yielding Treasuries to recapitalize after global financial companies reported more than $1.7 trillion in losses and writedowns. Banks boosted holdings in Treasuries to $125 billion in the year through June, Fed data show.
“The people who are recommending that he quits are responding to anger among voters toward all politicians,” said
Stuart Thomson, a fixed-income fund manager in Glasgow at Ignis Asset Management, which oversees the equivalent of $100 billion. “They think the money has gone to the privileged and not the people who need it most, and that’s why you’re seeing the anger being directed at Geithner, and indeed Bernanke. It’s difficult to argue they haven’t done a good job.”
