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With the largest trade deficit in history, based on an article I read, the
sellers to the US have to convert to local currency at one point to stay in
business, therefore sell US$. What do the sellers do with all those US
dollars, borrow local currency against their dollar accounts ? If the dollar
slides, then what happens to those US$ collateral accounts? Ira
swp wrote:
> Gary -
>
> The relationship between US investments and the dollar is very far from
> a direct one. First of all, you need to always remember that the
> dollar's gains and losses are not just due to the bond or stock market,
> and for that matter, money will not necessarily flow into bonds or
> stocks because the dollar is strong. The dollar is used as a medium of
> exchange in trade, so part of the dollar's demand -- a large part of it
> -- is as a medium of trade.
>
> Right now, rightly or wrongly, alot of folks are worried that the Fed
> could raise rates. Why would you own bonds if you believed that rates
> were going to rise? You would probably buy time deposits. Notice that
> the curve, I think, is steeper of late.
>
> There is much more to the story than that, and I do not pretend to have
> all the answers, but that might be part of it.
>
> Steve
> --
> Steven W. Poser, President
> Poser Global Market Strategies Inc.
> http://www.poserglobal.com
>
> Gary Funck wrote:
> >
> > the US$ made a big move up at the expense of the dmark and jyen Friday,
> > but the bond was down a little (rates higher). This up-trend in the
> > US$ has been in place for a while, and the bond is testing the bottom
> > of its trading range.
> >
> > I thought that as the big players moved into dollars, they'd also tend
> > to buy othe US$ denominated assets like the bonds, or stocks, but
> > both US bonds and stocks have been looking weak of late. Does that
> > mean the money is just 'parked' into US$ waiting to be deployed?
> >
> > Any ideas on the significance, if any of a stronger dollar, but weaker
> > bond? Any opinions on the impact on US stocks?
> >
> > --
> > | Gary Funck, Intrepid Technology, gary@xxxxxxxxxxxx, (650) 964-8135
>
> --
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