As usual I have a different take on Katrina impacts. It's not just that it's inflationary, but now more than ever the US requires a stable Clown Buck because of even greater borrowing needs from foreigners. We are probably talking an $800 billion trade deficit, and up to $400-500 billion federal deficits? What would you say?
The US can't afford to lower rates now, foreigners just won't show up. In the Katrina lower rate period from 8-25 to 9-7, FCBs bought a mere $493 million in new custodial holdings. In the last week they sold -1.654 B, and as you no doubt noticed, the bond rally reversed.
I would love to find a chart showing the yoy increase of FCB holding, it's really come down from prior $300 billion plus yoy, to $175 billion.
Marketable securities held in custody for foreign
official and international accounts
1,466,522 + 175,598 1,465,764
U.S. Treasury 1,097,287 + 50,494 1,097,542
Federal agency 369,235 + 125,104 368,222 |
