The U.S. government securities (GS) recorded its worst year since 1978, after the government expedite the issuance of new debt to help restore the economy from the deepest recession in six decades. According to the index of Bank of America Merrill Lynch government securities have lost 3.6 percent this year – the worst performance for at least 1978, when he began calculating the index. Holders of U.S. debt, however, have achieved returns of 81% in the last decade, according to this index, while the index for the same period Standard & Poor’s 500, including dividends and has lost 8 percent of its value. President Obama takes unprecedented amounts of funding for different programs. Only last week the Treasury sells government bonds worth 118 billion dollars. The issued government debt outstanding reached a record 7.17 trillion. dollars in November after the end of last year was a level of 5.80 trillion. “This is the largest increase in budget deficit for one year, excluding periods of wars and depressions. Realistic expectations for economic recovery and the accompanying increase in interest rates increased the yield of government securities, which automatically means lower prices, “says Christian Kari, a senior analyst at Societe Generale SA, Tokyo. According to him, prices could fall even more.
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Today’s session brought indexes in Asia and the Pacific region, the strongest decrease their day for the past eight months, but ended the week with a painful decline in most markets in the region. Stood at the head Japanese, Chinese and South Korean securities market, which lost between 4% and 6% of its market capitalization over the past five trading sessions. Reason for mass sales became the news of the failure of the Dubai government investment holding company Dubai World to meet its obligations to creditors. The Fund has a debt for 59 billion dollars, equivalent to most of Dubai’s foreign debt to 80 billion dollars. Meanwhile, the Japanese yen rose to its highest rate against the dollar since 1995. Financial difficulties of the Dubai World stocks fell on banks and insurers in the region, led by HSBC Holdings, whose shares fell nearly 8 percent. This is due to investor concerns about exposure of large international banks to fund Dubai. Construction companies also suffered because of the activity of the Dubai World in the construction sector. The regional index MSCI Asia Pacific, which brings together companies from stock markets in ten Asian countries plus Australia and New Zealand, slid 3.2 percent to 113.78 points. This is the strongest decrease in the stock measure within one day of 30 March so far. Financial companies in its composition have contributed most to the sharp drop in MSCI Asia Pacific. The good news that unemployment in Japan fell for the third consecutive month in October, while consumer spending increased household failed to stop reductions in the indexes. Thus MSCI Asia Pacific to cut their lead to five-year bottom of 9 March to 61 percent. For the past five trading sessions the index fell by 2,7 percent.
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