US Treasuries are used and owned all over the world. Japan owns over $500 billion, for example. Other soverign banks own trillions of them. Treasuries are also utililized as collateral, often overnight. Owners will loan out their paid-for Treasuries to someone in another time zone, for example, and the borrower can use these to collateraize all sorts of things. But, as other asset classes fall (stocks) the owners of treasuries tend to hoard them. So, when the borrower gets his or her hands on them they may not give them back. They pay interest to the borrowee but the bonds are kept. This forces the guy who loaned them (still with me?) to buy bonds at almost any price. So, you get yet another almost unbelievable spike in Treasury prices like we are experiencing today. TLT, my surrogate for the 20-year is up almost 3 1/2%.
Should this example NOT be the reason for the price spike then Treasury pricing is forecasting a depression.
