2009 Debt Rollovers Due

From David Rosenberg, chief economist at Merrill Lynch:

Bond Refinancing Risk in Emerging Market-land as Well

We saw from the December 29th FT that emerging market governments and corporates face a whopper of a $6.9 trillion debt rollover calendar in 2009 (Brazil with $205 bln; Russia with $605 bln; India with $257 bln; China with $2.4 trillion).

Hmmm... Something doesn't look right to me. The conventional wisdom is that China's reserves make it a rich nation. Doesn't look like the reserves will cover the bill to me. They're only $1.9 trillion. Unlike China, the US can repatriate capital from around the world through strong dollar and protectionist policy. With China, capital flight will be the big story. Still sticking with FXP and bearish on China.

But what if China starts to dump reserves to pay debt, forcing up US Treasury yields? If anything, this would be more deflationary and dollar bullish. I don't think that the US needs to borrow anything from China. The government can get all it needs right here at home. Until this is apparent, however, I would not be surprised to see the 30-yr head back up over 3%. If it does, I will look for a good buying opportunity and probably start with a 50% equity position. In the meantime, with FCX over $28, I am thinking of booking a nice little profit on that one.