Monday, August 8, 2011

Treasuries Up, Buffet Still Buying (TLT; BRK.a)

From Bloomberg:

Treasuries Rally as Equities Drop, S&P Downgrade Spurs Demand for Safety
Treasuries rose as tumbling stock markets sparked demand for the safety of government debt, reversing an initial decline sustained in response to Standard & Poor’s decision to cut the U.S. long-term credit rating.
Two-year yields fell to a record low after Japanese Finance Minister Yoshihiko Noda said U.S. Treasuries were attractive. Group of Seven nations said they will take every action necessary to stabilize financial markets after S&P on Aug. 5 lowered the U.S. rating by one level to AA+. JPMorgan Chase & Co. said any decline in Treasuries resulting from the rating reduction is unlikely to be sustained.

Lack of clarity about the ramifications of the downgrade “is poison to the markets, and therefore we should expect volatility in the form of every risky asset class suffering,” said Kornelius Purps, a fixed-income strategist at UniCredit SpA in Munich. “This will benefit highly rated government bond markets."...MORE
That wasn't too tough to figure out:
Markets: What to Expect Monday Morning
...In a nutshell we are looking for:
Treasuries okey-dokey.
Equities get sold....
What to Expect on Monday: The Box
...Back in the day, traders would actually carry their certificates in a box.
The longest surviving among them would place their most speculative holdings on top with the quality rising as you went deeper into the box.

Should a panic sweep the floor (or the sidewalk in the case of the Curb Exchange) they would begin by selling the cats and dogs, reserving the highest quality for those instances when they absolutely had to have something that was recognized as quality and readily salable...
From the Wall Street Journal:

Buffett: U.S. Should Be Triple-A 
Investor Warren Buffett said U.S. sovereign debt, cut on Friday to double-A-plus by Standard & Poors, still merits a triple-A rating and that Berkshire Hathaway Inc. is still a buyer of Treasury bills.

In an interview with CNBC and posted on its website, Mr. Buffett said he's buying T-bills despite the low yields....MORE