Wednesday, June 29, 2016

Foreign investors love US Treasuries

Treasuries have a tremendous safe-haven appeal. Foreigners, when times are tough, go to Treasuries... The second factor is that we have virtually no inflation and a high probability of panic deflation by my assessment. And the third interesting factor is Treasury yields, as low as they are, are much higher than those of almost every other developed country. You look now and Germany is negative; Japan, they're negative. 

So, for European investors, they basically can invest in Treasuries and pick up a yield spread and if the dollar rallies, as I think it will, they get a double whammy because they get more yen or more euros when they convert that back into their own currency.