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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: JF Quinnelly who wrote (7828)	1/4/2003 8:46:48 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 306849

Well, if you conflate small investors with firms that invest huge sums I guess it would seem confusing. why don't you drop the attitude and have a straight discussion? cut the smarter-than-thou BS innuendoes, please. or else don't respond. the problem exists for "huge investors" as well: they have currency risk. a large European investor who plunked down billions to buy "safe" Treasurys this past year has seen a capital loss in euro terms despite the bond bull. right now US bonds are very susceptible to foreign perception of the dollar. foreigners own 35% of outstanding tradeable Treasurys, and have been responsible for 55% of net purchases over the past 18 months. they have also upped their share of Agency paper considerably, again up sharply from 2000. as the dollar has fallen heavily against gold, other currencies, and the CRB this past year, it seems likely that the foreigners' share of our debt could turn the other way and they could become net sellers. and this is before considering their reaction to our going to war with Iraq. the implications for our interest rates are not good. if you really want to look at the reasons behind the huge foreign bid that has obtained in Treasurys these past couple years, you've got to look for something else besides "flight to quality". and that something else has everything to do with the mercantilist trade policies of our Far East trading partners.