Thursday, July 19, 2007

Foreigners saving the US markets ?

Foreigners have been buying US corporate bonds, treasuries and equities in record numbers in part due to their huge foreign reserve surplus - think China and the Middle East who have a combined $1 trillion plus in foreign reserves.
Treasury buying as of late has slowed down and thus the increasing yields. These international buyers have kept our rates low while helping sustain this bull market. A weakening US Dollar is starting to worry these buyers and affect their returns. Perhaps further slowdown in Treasury buying could cause yields to increase further putting an end to this bull rally. Just something to consider.

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