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Gold/Mining/Energy : Newmont Mining(NEM) & Newmont Gold(NGC)
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To: Freedom Fighter who wrote (246)5/30/1999 2:29:00 PM
From: ahhaha  Read Replies (1) of 587
 
The Treasury isn't interfering in the currency market.

The FED has been buying some long Treasuries and it may be partially intended to offset other central banks sales, but it is very small.

The demand for Treasuries from foreigners hasn't kept their rates from rising. Treasuries are priced according to future expectations of US inflation, not based on continuing demand. Continuing demand only allows continuing supply at a given price. The borrowing needs of the US government have been declining, and so continued supply isn't in excess of demand. The supply is maintained at the demand and so expectations truly rule pricing.

Foreign economies are reviving and so their demand for Treasuries is declining at the margin.

You are stating as given that the US is a low savings country. I am stating that it isn't. You have been influenced by economists who count savings in a way differently than I do. Savings is high because investment is high. You just don't believe that savings equals investment.

Dollar strength has little to do with foreign demand for Treasuries. That demand is an outcome, not a cause. The dollar is strong because the US is secure, with low inflation, and has opportunities for dynamic growth not currently available elsewhere. The result is that foreigners buy dollar denominated assets including Treasuries, but it is completely wrong to think movements into Treasuries alter their prices.

This is the same mistake made with stock evaluations. Stocks are priced according to earnings expectations, not on the instantaneous demand/supply. Demand and supply come into equilibrium at a price level equal to expectations of future earnings and the risk adjustment called P/E multiple.
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