Stratfor reports that more European nations are likely to face credit downgrades, and that, ultimately, a restarting of the global economy and flow of credit will be needed to drive down the cost of debt financing.
The article mentions how the massive amount of debt being issued by the US Treasury, in the form of Treasury bills, is really squeezing other countries, as they vie for very small remaining slivers of the sovereign debt pie.
We, like the rest of professional investors it seems, are quite bearish on US Treasuries (that’s the only thing we don’t like about this trade).
National governments will really feel the squeeze if and when rates on their sovereign debt begin to rise. Couple that with falling tax receipts…and rising expenditures…look out!
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