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Challenging the Safe Haven Status of US Treasuries
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New research presented at the Kansas City Fed’s annual conference in Wyoming challenges the idea that US Treasuries are a “safe haven.” The COVID-19 pandemic exposed weaknesses, showing that Treasury behavior was akin to that of other countries' debt. Instead of hoarding Treasuries, investors marked them down similarly to other bonds. Central banks' purchases of large quantities of these securities temporarily prop up prices but disadvantage taxpayers and favor bondholders. This move towards a risky debt model complicates the valuation of Treasuries and the functioning of the market.
| Scores | Value | Explanation |
|---|---|---|
| Objectivity | 6 | Comprehensive reporting and in-depth analysis. |
| Social Impact | 4 | Strong social discussion, influencing some public opinion. |
| Credibility | 5 | Solid evidence from authoritative sources. |
| Potential | 5 | Very high potential to trigger larger economic discussions. |
| Practicality | 4 | Highly practical, applicable to real economic issues. |
| Entertainment Value | 2 | Slightly monotonous, few entertaining elements. |