Bond traders bet on US recovery – great news for world economy

Despite all the anxiety over the global economy, including from the World Bank earlier this week, I remain optimistic, and recent news out of the US gives hope for a much better 2012 than originally expected. Bloomberg Businessweek reports:

Treasuries are off to their worst start in nine years amid signs the U.S. economy is strengthening and Europe is moving closer to resolving its sovereign-debt crisis.

Yields on benchmark 10-year notes climbed 16 basis points, or 0.16 percentage point, the biggest weekly increase since the five days ended Dec. 23, as reports showed fewer Americans than forecast filed for unemployment benefits and home sales rose for a third month in December. The refuge appeal of Treasuries eased as Greek officials held debt-swap talks and European bond sales saw increased demand.

It’s good news that demand for US Treasury bonds is falling, because it means the fear that has prolonged the Great Recession has ended, and investors are now less willing to invest in low yielding, but safe Treasuries and are willing to risk investing their money elsewhere. Recovery in the US will allay any concerns about China and hence will be great for business and consumer confidence in Australia.

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