31. July 2009 by Dan Walkow, CFA, CMT.

It would appear China is backing off buying US treasury bonds. China is the largest creditor to the US and, regardless of the rhetoric, have been concerned with the US dollar devaluation. They have been calling for a international reserve currency, this lack of buying at the bond auction is another signal that they are taking action. This from the WSJ today:

Shaky auctions of Treasury notes this week reignited concerns about whether the government can attract buyers from China and elsewhere to soak up trillions in new debt.

A fuse was lit this week when traders noted China’s apparent absence from direct participation in two Treasury bond auctions. While China may have bought Treasurys just before the auctions, market participants read the country’s actions as a worrying sign that China and other foreign investors may be ratcheting back purchases at a time when the U.S. is seeking to fund a $1.8 trillion budget deficit.

This week alone, the U.S. deluged the bond market with more than $200 billion in record-size sales. The U.S. has had little trouble finding buyers in recent months. But that demand is fading, and the Treasury market has become volatile. Many are selling in favor of riskier assets such as corporate bonds, stocks or even higher-yielding debt of other countries. This portends higher interest rates for the Treasury, and it may need to find alternative sources of cash like issuing more inflation protected Treasury bonds.

Tension on Wall Street trading desks began building late last week when the Treasury surprised the market with plans for a record week of sales. A Monday sale of $90 billion in Treasury bills with maturities of as much as a year went well. But China appeared absent from the following two sales, which totaled $81 billion of debt, traders say. Read more here.

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31. July 2009 by Dan Walkow, CFA, CMT.

If you have been selling stuff on Ebay or similar online services and have not been declaring the income on your tax returns you might want to pay attention!

The Canada Revenue agency is going after anyone who has sold more than $1,000 dollars USD a month online.

John Wonfor, national director of tax for BDO Dunwoody LLP, said the CRA is concerned only with professional e-commerce practioners, not individuals who may infrequently sell items such as used sofas just to get rid of them, usually at a loss. “You don’t have to pay tax on a loss and you can’t deduct it because it’s personal use property, so it’s a non event.”

Similar tax laws are being enforced in the USA.

Revenue Minister Jean-Pierre Blackburn said Thursday anyone who has sold products on the Web site could avoid audits, fines and penalties by voluntarily coming forward and declaring the revenue to the agency. See full story here.

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