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Strategies & Market Trends : The coming US dollar crisis

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To: Real Man who wrote (2372)11/15/2007 6:16:35 PM
From: Giordano Bruno  Read Replies (1) of 71479
 
Tokyo's insurance companies and pension funds tend to track the gap in yields between US three-month bills and 10-year Treasuries. This has reached 50 basis points and is growing fast.

As the yield curve "steepens", Japanese firms buy hedges that drive down the dollar. Although this complex pattern is little understood in the West, it can have powerful effect on global markets.

"This is the real reason why the yen is rising. It will reduce liquidity. We remain ultra-cautious on share markets," said Mr Redeker.

telegraph.co.uk
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