Politicians Can Still Do Something Stupid: Adams

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Oct. 15 (Bloomberg) –- Henderson Global Investors Director of Fixed Income Kevin Adams discusses the negative effects of the debt debate on the global markets and Fed Tapering with Mark Barton and Anna Edwards on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

February, does that increase the risk for owning debt do that time of year?

I think it does.

It doesn't bring a resolution of any material substance.

What we have seen is yield around october were rising above those in november.

If we get an extension to february that is an issue.

What about that beyond three, four months?

How will that fair if it is pushed back to february?

It leaves uncertainty regarding the u.s.'s situation and the negotiation deadlock we seem to be in.

It should in theory lead to high risk for treasuries.

That is something we have seen a little bit so far, but you would expect the risk premium to be you rode in.

The only way we are going to get away from this would be if the debt ceiling were to be raised some stand surely -- raised substantially, if the economy picked up and enable that to happen.

Does any of that look possible?

We are hitting against that stealing.

We bump up against it.

Until they increase taxes, which looks unlikely at the moment, only with more growth will we get sufficient decrease in tax revenues or general improvement in the economy, and that will get us out of this.

The growth is reasonable but not enough to make a material difference to the deficit.

Do you think any other country is just days away from potentially missing payments on debt do, the bot markets would be as relaxed as they are right now?

You're going to talk to the former minister of greece in a moment.

He expresses disbelief at the lack of punishment being meted out to the u.s.. exactly.

If you look at what is happening with greece a year and a half or two years ago and the escalation in bond yields and you look at what is happening in the u.s., it is up by 10 or maybe 20 basis points.

It is just not happening.

The question has been asked why aren't the bond vigilantes punishing the u.s.. the fed is in the market.

We all believe once we get to the cliff the politicians will pull back and it will all be fine for another three or four months until february.

There is a very small possibility something stupid happens when politicians do not agree and we do not pull back from the cliff.

Is a time for the chinese and the japanese to reassess buying with u.s. treasuries?

Is now the time, or what does it take for them to reassess buying of the treasury market?

I am not sure they have an alternative.

It is the largest, most liquid government bond market.

They have most of their assets already.

If they stop buying or starting cell that forces what they already have, so it is kind of a catch-22. with tapering or other issues

This text has been automatically generated. It may not be 100% accurate.


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