Lo and behold, it’s another free-fall in the dollar in the wake of the “Geithner Goes To China to Beg for Creditor Mercy” trip. DXY now down 81 bps to 78.34, the low of they day. Gold up $6 and change. Crude oil back to positive after trading down most of the day. And the beat goes on. The president of Russia, Dmitry Medvedev, is openly talking about a multi-national currency that would reduce dollar risk. Everything from the Brazilian real to the British pound is gaining ground against the buck.
Currency traders “selling Geithner”
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{ 2 comments… read them below or add one }
The yahoo graph of the 30yr Tres Bond shows a 30 year trend of the yeild going from 15% down to 5% (1980-present) , and more recently down to 2%. If China stops buying gov debt could this yield start trending higher than 5%, breaking it’s long term trend? If so, what happens?
Mike Larson Reply:
June 2nd, 2009 at 4:12 PM
Yes, it very well could. The bond buying frenzy of late 2008 had all the hallmarks of a last-ditch bubble move. Jim Grant of Grant’s Interest Rate Observer is also a believer in the theory that we’ve seen the end of the long-term bull market in U.S. bonds. Higher long-term rates in the underyling Treasury market will lead to higher long-term rates on private loans/bonds, and therefore, lower bond prices. Long-term mortgages, for instance, will get more expensive.
At what interest rate level would you jump in and buy shares in a long treasury fund?
Would you buy intermediate Treasury fund shares then? How long do we have..does the spike last a week,month,what?
Thannk you very much…