The US and all other highly indebted major DMs issue debt in their own currency so an outright default is highly unlikely. The debasement trade will most likely show up in FX. By swapping back the purchases of Sweden or Swiss bonds into USD, you miss the bulk of the debasement trade because the investor is effectively unhedged vs USD weakness.
Any thoughts on Norway? Comparable to Sweden? Quite a bit more natural resource and sovereign wealth comparably.
The US and all other highly indebted major DMs issue debt in their own currency so an outright default is highly unlikely. The debasement trade will most likely show up in FX. By swapping back the purchases of Sweden or Swiss bonds into USD, you miss the bulk of the debasement trade because the investor is effectively unhedged vs USD weakness.
The convenience yield looks highly correlated with the fed funds rate.
Excellent post: clear, thoughtful, and concrete.