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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: shades who wrote (54206)	2/19/2006 12:27:58 PM
From: bond_bubble	Read Replies (1) \| Respond to of 110194

As per Martin Feldman (?), the treasuries have been releasing the foreign purchase of us bonds at very high numbers. Apparently, total money coming in should equal that going out (this arthmatic has to hold always). This means, for the foreign money to come in excess of trade deficit (trade deficit being a significant source of the foreign money coming in) - there must be someone else who must be handing over lot of dollars to foreigners (in excess of trade deficit) so that they can buy US bonds. And Martin says this could be that the private (?) foreign investors are withdrawing money from US banks and taking this money to their home country!! And some of these money taken out is coming back (probably through FCBs) in US bond purchase. I think Fed is trying to appease the foreign investors so that they can hold their money in US banks. Holding these private investors in US banks might be less burdensome on FCBs and that might help the inflation in foreign countries to be held low (so that FCBs dont have to print/sterilize exessively)!!. The treasury dept is unwilling (or not knowing?) to tell us where the foreigners got the extra dollar to purchase USTs. That is the key - that will be driving the interest rates. Also, last month US bond flow from foreign was less than trade deficit - Is that a sign lot of foreigners are bailing from US banks? I'm not sure, but my 2 cents is that interest rate rise might stop at 4.75% and then they start rising again in 2H.