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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: RealMuLan who wrote (71407)	11/19/2007 3:39:59 PM
From: RealMuLan	of 116555

U.S. policy makers are ``playing a dangerous game by allowing the dollar to depreciate so much,'' said Phil McHugh, a trader at Currencies Direct Ltd., an investment management company in London that oversees $2 billion. GCC officials would make ``a big statement'' if they revalue, he said. If the GCC weakens its ties, oil producers will have less reason to recycle their revenue into dollar assets. OPEC members increased their holdings of Treasuries by 14 percent this year through September to $125.7 billion, Treasury data show. Petroleum exporters are buying U.S. bonds three times faster than other foreign investors, the data show. Yields on 10-year notes are 21 basis points lower because of petrodollars, New York-based consulting company McKinsey & Co. said last month. A basis point is 0.01 percentage point. The 10-year note yield was at 4.16 percent. ``Government institutions and residents would likely move assets out of dollars into alternative currencies,'' said Tristan Cooper, senior sovereign analyst for ratings company Moody's Investors Service in Dubai. bloomberg.com

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