Whether or not there is a demand for US bonds, there is certainly a demand for USD$. http://www.bloomberg.com/news/2011-09-1 ... ghten.html
The premium European banks pay to borrow in dollars through the swaps market is close to the highest level in almost three years. The cost of converting euro-based payments into dollars, as measured by the one-year cross-currency basis swap, was 99.1 basis points below the euro interbank offered rate, or Euribor, at 12:24 p.m. in Frankfurt, indicating a premium to buy the greenback. It widened to as much as 112.6 basis points earlier this week, the most since Dec. 2, 2008, according to data compiled by Bloomberg.
In short, the US lenders are assuming the EURO banks are going down, and not lending them dollars. Moody's cut Credit Agricole SA (ACA) and Societe Generale SA's credit rating - same article.
This is going to make it difficult for EURO nations to balance international accounts, and expensive. And that will cut trade as the cost of the transactions will eventually be borne by whoever buys imported/exported items.
Just MHO, but there's almost no chance for those EURO nation bonds to take off. Germans in particular aren't going to be fooled that somehow this will NOT translate into higher taxes or reduced services for Germany. If the market truly did average out all the net values, Germans will still be paying more to borrow. If the market remains skittish as it has been and demands a premium, EURO national bonds would be the death of the EURO, because Germany would be the first to retreat from the EURO.
Also, BOA is foreclosing at a very high rate, and very suddenly. Whether they think the time has come to move those properties, or they just want to clear the books, they are pouring it on. If this catches on with other banks, housing prices will take another drop.http://www.calculatedriskblog.com/2011/ ... erica.html
And the income report came out, we've now dropped back to 1996 income levels.