Fears in the bond market

Fears seem to be mounting in the bond market.  The possibility of effectively nationalizing Fannie Mae and Freddie Mac may be the catalyst.  From acrossthecurve.com:  “The decimation of the wealth stored in US Treasury debt, once viewed as the safest of all venues, resulted from the reports that the US government was planning to bail out FNMA and Freddie Mac. This prompted a flight from the US Treasury assets into all sorts of paper. It was a vote of no confidence  as Treasury paper underperformed all other asset classes.I am writing this a little early today so these closing levels may not hold as equities have recovered on news that Bernanke has said he will open the Discount window to the GSEs . That should not be a surprise. “

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