In spite of issuing toooooo much bonds, USD is rallying, now this can be due to many causes, let consider where these investments will go if not in here ?
Europe? As we all know what is the debt situations in Europe, it was Greece, now it is Ireland & who can say next is Portugal or Spain or U.K. ! So are you going to invest in these countries where their bonds spread are rising & their currency is suffering or will going to suffer ? No, not at all ?
So where these investments will go? Certainly they cannot go in
Japan better to say deflationary . Japan
They can come in Emerging markets but right now emerging markets are still too expensive despite all these corrections those are going on now. So these investments are choosing US bond market ( read as US T bonds ). Other way we can say that it will be a little bit secure if suddenly market crashes.
Though there are some exceptions -
& china are going to do bilateral trade in local currency rather than US$ and not only that Chinese yuan will going to trade in Russian market. This is an important news that is going to effect the currency market in future. Russia
To prevent their currency appreciation & there by to protect their export, Brazil in last month raised tax on foreign investment in fixed-income securities. This and other causes are making some funds to shift their destination from Latin America to Asia .For example Pine Bridge Investments Japan co. said their $1.9 billion bond fund will start their investment in
in next year as when it is expected that nation’s currency will appreciate. One thing to remember here that India ’s 10-year bond’s yield are 7 times higher than similar Japanese debt. India
Looking at the world scenarios it looks like in future every country will try to depreciate their currency to protect their export. Every country is going to put money into its own pocket, it doesn’t matter whether they are under any umbrella or not. Even if they are under any umbrella they will formulate things in such a way that it is ultimately going to make them gainer.
Today if you need to make market down, you just have to spell it. Because there are lot of things or diversifications among these elements that whenever & whatever you want you can choose. It’s a group that is working quite hard on these matters !!!!
NOTE : Please see the disclaimer below this blog .