That kind of market clout gave Pimco the ability to move markets: I remember tracking him down in the mid-1990s to confirm that he had recently made a fresh allocation to long-term Treasuries.
NGOs and treasuries are debating whether funds should go, for example, to national treasuries; to the Global Fund to fight Aids, TB and Malaria, or to the UN for mitigation and adaption to climate change.
However, just the opposite occurs in South America where, after IMF guidance, state companies that are independent of their treasuries are included in the calculation of public accounts.
At the same time it could show that its newly adopted stance in favour of social investment has some degree of practical backing.Furthermore, in post-Maastricht Europe, public companies that are independent of their treasuries are not included in the calculations of the public-sector deficit (or surplus).
They are both, to some extent, priced off the yield available on allegedly risk-free bonds (Treasuries).
But it has been lending on such a huge scale that it has used up the bulk of its Treasuries.
It would be awkward, naturally, for politicians to argue that old, poor and sick Americans should forgo their government benefits so that foreign bankers and governments can continue to earn interest on their huge holdings of Treasuries.
Cochrane againdemand deposits, fixed-value money-market funds or overnight debt must be backed entirely by short-term Treasuries.
The yield on ten-year Treasuries soon dropped to 2.5%, having been above 3% a day earlier.
After all, yields on Treasuries are substantially higher than those in most of Europe (German 10-year yields dropped to 0.72% on October 15th) and American inflation is low (1.7% in August).But probably the biggest reason why yields have fallen is that global growth has been disappointing, with the partial exception of America (where GDP fell in the first quarter, but has since recovered).
That is because dollars and Treasuries rank as safe havens nowadays.
