The Broader Market

July 18th, 2011

The Debt Limit Ought to Worry Canadians, Too

by Jordan Eizenga

There is a lot at stake for Canadians in the faltering U.S. debt-limit negotiations.

If you have been following the U.S. debt-limit negotiations, you will undoubtedly have heard U.S. Treasury Secretary Timothy Geithner’s repeated warnings that failure to raise the debt limit would have catastrophic consequences for the U.S. economy: The credit rating of the United States would be downgraded, interest rates would rise, the safety and security of the dollar would be questioned, and the American economy would plunge back into a deep recession.

March 21st, 2011

Japanese crisis and U.S. Treasuries

by Jordan Eizenga

It has taken very little time for prognosticators to estimate the potential impact of the Japanese crisis on the financial markets, most notably, the U.S. Treasury market. Some economists have argued that, in order to finance reconstruction of its infrastructure, Japan may need to sell a substantial portion of its debt holdings.

And at the top of those holdings is US Treasury bonds.

Japan owns approximately 20 percent of U.S. government public debt, which makes it the second largest foreign creditor to the United States. If Japan were to engage in a large sell off of US Treasuries, interest rates would spike in the United States - a particularly undesirable outcome for a highly indebted nation.

The Broader Market

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There is a lot at stake for Canadians in the faltering U.S. debt-limit negotiations.

Japanese crisis and U.S. Treasuries

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