The Prime Minister of Russia, Vladimir Putin, said that the United States “is a parasite” due to their increasing debts and massive effect on the global economy. Putin also said that the same debt is the “safest possible investment”.
Russia is notable for its large energy production and has enhanced their holdings of the US debt by over 1600% since September 2006, according to a report released by the US Treasury Department. Russia has utilized increasing commodity prices to construct the world’s third biggest reserves pile, enhanced in part by Treasuries.
Russia is now considered as one of the ten biggest holders of securities valued at $110 billion since June 2011 ended, which is around 70% over what Putin left the Kremlin.
According to Edwin Gutierrez from Aberdeen Asset Management, “They are sending out a message largely for domestic consumption. It’s ironic that these voices of complaint come as they experience massive capital appreciation.”
The dollar bonds of Russia due in 2020 have gained 9.5% this 2011 which can be compared with the 12.7% from the same maturity US debt. This month, the Russian dollar bonds moved up by 0.7% compared to the 5.6% increase of US bonds. Ten year Treasury yields have declined 2% for the first time the day before and have dipped to a record low of 1.9735% prior to moving up once again. The yield on 10 year US Treasuries has declined by 2.77 percentage points of 277 basis points in the last five years, according to figures that have been put together by Bloomberg.
Tags: energy production, Russian Treasuries, United States, commodity prices, treasury yields, dollar bonds, massive capital appreciation
