In fact, the Treasury Department is set to sell tens of billions of dollars in two- and five-year notes next week. Considering the Congressional Budget Office (CBO) issued a sobering report that this year's deficit will likely climb to over 8 percent of U.S. gross domestic product, or $1.2 trillion – some lawmakers are worried that record spending could bring new woes in the years ahead.
On CNN’s website Rep. Eric Cantor (R-VA) writes “such heavy borrowing runs the risk down the line of rampant inflation, which scares away foreign capital while making the purchasing power of the dollar weaker for American consumers.”
And the Wall Street Journal adds, “this burst of spending so early (could) demand cutbacks in social programs and even potential tax increases.”
How Can You Trade It?
Fast Money trader Jon Najarian thinks a flood of T-bills could burst the bubble in the Treasury market. He suggests shorting T-bills by getting long ProShares UltraShort Lehman 20+ Yr . Or he says take a look at gold .
I’d look at the Morgan Stanley Emerging Markets Debt ETF as a play on emerging markets, adds Tim Seymour.
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Trader disclosure: On Jan. 20th, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (C), (BAC), (TM), (SDS); Adami Owns (AGU), (C), (BTU), (GS), (INTC), (MSFT), (NUE); Seymour Owns (AA), (AAPL), (BAC), (F), (EEM), (FXI), (TSO); Najarian Owns (MS), (PALM) ; Najarian Owns (EEM) Call Spread; Najarian Owns (FCX) & (FCX) Short Calls; Najarian Owns (MS) Short Calls & Short Put Spread; Najarian Owns (NVLS) Calls; Najarian Owns (XME) Long Calls; Najarian Owns (IYR) Puts
Najarian Owns (GLD), (GG)