For decades, 30-year Treasury bond futures have been an attractive option to investors drawn by the creditworthiness and stability of the U.S. government.
However, there is growing speculation among financial experts as to whether this will always be the case, especially now that free-spending European nations are starting to see their own longstanding debts come back to trouble them.
Amid the spotlight on the size of the deficits facing countries like Greece, Spain, Portugal and even Great Britain, the U.S. maintains a national debt that will approach its current $14 trillion limit in the coming months. U.S. officials have long dismissed the idea that the government would ever default on its obligations, although at this time it is already paying several hundred billion dollars per year on the national debt.
This week, a CNBC report quoted Arnab Das of Roubini Global Economics as saying that “eventually the U.S. will face the same problems as the euro zone, but the bond market will probably give the U.S. until 2012 to get their act together.”
A handful of European countries are already experiencing higher borrowing costs brought on by nervous investors seeking higher rates of return. In the long term, this could be a factor that helps push some of these countries closer to default.
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