Short dated bills that may be defaulted could be rejected as collateral. Could this disrupt Equity markets? The congress has been unresponsive to the public anger at their inaction because Equity indexes continue to rise with Dow up 600 pts in last 3 trading days. Thanks to FED printing 85B a month.
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This is more than talk. It start in Hong Kong where hedge funds were told they would need to post more collateral if they were using short term Treasuries for collateral. When the debt ceiling issue was kicked down the road, the Jan/Feb 2014 Treasuries began pricing in another debt debate, meaning they are now losing value as collateral. Could this ultimately be very distruptive to the equity markets? I suspect so, but the question is when
I would be curious what mindless, drooling, slack jawed imbecile started that talk.T-bills are the lifeblood of the entire government!