Jim Rogers: US creditor nations to shun Treasuries

Jim Rogers: US creditor nations to shun Treasuries
Mon Jan 12, 2009 9:34am EST

NEW YORK, Jan 12 (Reuters) - Jim Rogers, a prominent international investor, on Monday predicted that many creditor nations could start shunning U.S. assets, particularly Treasuries, as the economic crisis lingers on.

"If I were the Chinese, I wouldn't buy another single U.S. government bond," said Rogers, who was speaking by teleconference in an interview with Reuters. "I can't imagine anybody is going to give the U.S. government money for 30 years at 2.5 percent or even 4 percent or 4.5 percent. It's mind boggling to me."

China in 2008 became the largest holder of U.S. Treasuries, surpassing Japan.

Prices of long-term U.S. Treasury bonds appear dangerously overstretched after a soaring rally, which began soon after the Lehman Brothers bankruptcy.

The yield on the benchmark 10-year Treasury note, which was trading over 5 percent in June 2007, hit a five-decade low of around 2 percent in mid-December. Currently, the yield on the 10-year note is around 2.43 percent.

"All the big creditors are going to be slowly cutting back ...more and more diversification against and away from the U.S. dollar -- and away from long-term bonds," Rogers added. (Reporting by Dan Burns and Jennifer Ablan; Editing by Theodore d'Afflisio)

http://www.reuters.com/article/marketsNews/idUSN1248477420090112