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Strategies & Market Trends : The Art of Investing

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Dec 8 4:00 PM EST

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To: rich evans who wrote (147)	10/5/1998 2:28:00 AM
From: Sun Tzu	Read Replies (1) of 10686

>>Overcapacity in SEA and Japan means to me that the trade deficit will continue as will deflationary pressures. T bills will continue to sop up the excess dollars held by foreigners or Bank of Japan etc. Japan can print yen and inflate . I don't see them selling their US T Bills and exchanging for yen on any net level.<< May be. Then again, the trade deficit that you mentioned may cause USD depreciation, which in turn would cause a drop in T-Bills, since most investors do not like to hold debt in falling currencies. And as far as Japanese banks are concerned, much depends on how they try to fix their banks. Banks failures could mean asset liquidation which could mean sale of U.S. T-Bills. Then again, as you said, BoJ may take over and prevent this. I don't know which way the dice will roll, but I try to make my investment decission in a manner that I will not get hurt either way. To that end, I've been recommending DM Bundes over US T-bills lately. Sun Tzu

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