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Strategies & Market Trends : Asia Forum

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To: Jack Clarke who wrote (236)12/29/1997 2:12:00 PM
From: Zeev Hed  Read Replies (3) of 9980
 
Jack: I do not think that such a deal is really necessary. The US is currently in a position where it issues less new (net) bonds than the interests it pays out (by about I would say $120 Billion last year). Since most of the interest paid out on the debt is reinvested in bonds, there is actually a shortage of bonds, and thus selling of japanese owned bond into that kind of environment provides stability in the markets. The US is certainly not interested in seeing an inverted yield curve which would have happened if the Japanese were not net sellers. It is what is happening at the margins that count.

Zeev
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