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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (43186)	11/27/2008 12:51:23 PM
From: RJA_	Respond to of 217865

>>the USD will sooner or later depreciate substantially as public anger will not let their CB and other institutions buy US denominated paper. I only wonder why it took so long Fed buying own dog food (Agencies): blogs.cfr.org…/ 7. The way China manages its reserves matters immensely for the world not just China China shifted from buying Agencies to buying Treasuries in July. Others did too, but no one has quite the market impact of China. China doesn’t disclose what it is doing with its reserves, but the recent shift in Chinese demand isn’t really in doubt. The market knows it. The TIC data for August showed it. And the latest Fed data strongly suggest large ongoing migration from Agencies to Treasuries. China now accounts for such a large share of the world’s reserves that it is hard to see how the FRBNY’s custodial data doesn’t reflect, at least in part, a shift in Chinese demand. A key themes of this blog has been how the internal imbalances of China’s economy are a reflection of its undervalued exchange rate – and that China’s surplus has implications for the world. It has to be balanced by large deficits elsewhere. Another key theme has been that the Fed has been pushed to absorb risks that other central bank reserve managers now shun. Nothing illustrates this more clearly than the Agencies. Foreign central banks are scaling back their Agency holdings. The Fed is gearing up to buy. Big Time. One last note: I am taking a few days off for Thanksgiving – I’ll be posting again next week. This entry was posted on Wednesday, November 26th, 2008 at 9:08 pm and is filed under China. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.