End of QE2 in July will have significant implications for worlds interest rates
Having just watched the Munk Debates on growth in China, my mind is on global economics. This article in the WSJ yesterday by Jim Baker was about the debt ceiling fiasco in America.
Then this little gem of a paragraph at the end of the article.
With the Federal Reserve ending its purchase of bonds later this month, the Treasury must rely even more on China, Saudi Arabia, Japan and other countries to invest in our securities. The cost of these borrowings will ultimately increase if the U.S. is not seen to be dealing with its fiscal problems. We must demonstrate to the American people as well as the world that our leaders are doing so.
He is of course referring to the misunderstood QE2. In simple terms US treasuries will be priced by the market commencing July and all that implies for interest rates.