CME raises Collateral Haircut for US Treasury while Politicos crave for debt solution
In an another event of losing luster of US government debt, CME raised the collateral haircut for US Treasury signaling the markets that US treasury might not be as safe now. Haircut for TBILL which was zero earlier will now be 0.5%. For TBOND/TNOTE and TSTRIP haircuts for all the maturities have raise by 1%. In case of US Government Agencies, all the BOND/BILLs and Mortgage Backed Securities will have 1% higher Haircut and the haircut for the BILLs of US Government Agencies has been raised by 0.5%.
CME has raised the haircut for collateral foreign securities too. Here is the table for the previous and new haircuts:
US politicos are failing on their own deadlines to find a solution to debt ceiling and things are getting worst around the corners. There seems to be no will in White House to take firm step to cut the debt. Without a sacrifice today US can not have a better future tomorrow. With elections in November 2012, we might see more of a QE3 thing than an proper attempt on cutting out on debts.