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Who Does and Who Wants To Own US Debt
Japan is poised to pass China as the largest US creditor as Japan added US$55.3 billion of Treasuries this year. This increases its total holding to US$821 billion according to Treasury data. China, reduced its US debt by US$48.1 billion to US$846.7 billion.
The purchases from Japan show no slowdown in demand for America’s debt which will help keep funding costs down as the deficit swells.
Foreign holdings of US debt have increased US$374 billion this year to US$4.07 trillion as of July, according to Treasury data.
Demand from international investors for Treasuries is in contrast with the view of Warren Buffett the world’s greatest investor. He states unequivocally in a Fortune magazine article that investors buying bonds now “are making a mistake”.
“It’s quite clear that stocks are cheaper than bonds,” Buffett said. “I can’t imagine anyone having bonds in their portfolio when they can own equities.”
Stock dividends are paying more than government bonds. According to Bloomberg Ten year Treasuries yield 5.2 percentage points less than equities of companies in the Standard & Poor’s 500 Index.
Looks like of another case where investors are taking their eye off the ball in regards to weighing up the benefits and risks of investment choices.
The purchases from Japan show no slowdown in demand for America’s debt which will help keep funding costs down as the deficit swells.
Foreign holdings of US debt have increased US$374 billion this year to US$4.07 trillion as of July, according to Treasury data.
Demand from international investors for Treasuries is in contrast with the view of Warren Buffett the world’s greatest investor. He states unequivocally in a Fortune magazine article that investors buying bonds now “are making a mistake”.
“It’s quite clear that stocks are cheaper than bonds,” Buffett said. “I can’t imagine anyone having bonds in their portfolio when they can own equities.”
Stock dividends are paying more than government bonds. According to Bloomberg Ten year Treasuries yield 5.2 percentage points less than equities of companies in the Standard & Poor’s 500 Index.
Looks like of another case where investors are taking their eye off the ball in regards to weighing up the benefits and risks of investment choices.
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