treasuries

The old saying goes that just because you're paranoid doesn't mean everyone else isn't in on it. It's starting to feel that may be true in the bond market.

For years (even decades) there have been theories about collusion between America and Asia in the government bond arena. Through the 1980s and 1990s, Japan supported America by buying Treasuries. And since 2000, China has stepped into that fray. Using its trade-earned dollar holdings to invest heavily in American paper.

The conspiracy camp says Asia has been brow-beaten by America into doing so. There is no sound business case for them to be investing in U.S. bonds.

Despite all the talk that foreigners (China, Japan, et al.) will flee U.S. government bonds, the market remains stubbornly buoyant.

Last week we got the latest numbers on foreign buying of U.S. securities. And they once again looked strong.

In April, foreign buyers picked up a net $76 billion in Treasuries. The third-highest monthly total ever.

It's clear from the chart below foreign buying remains in an uptrend.

US Securities – Foreign Buying - Chart
Full article at: Treasuries

The euro as presently configured is doomed due to structural imbalances between mercantilist and consumer nations. A "euro1 and euro2" system would allow a face-saving demise to euroland's single currency.

I've got a bad feeling about the Euro: the structural imbalances I presented yesterday irrevocably doom the single currency.

Just to recap the cycle and its consequences, here is a chart:

Click here for chart: The Mercantilist Nation - Consumer-Debt Nation Cycle
Full article and chart at: The Euro

The U.S. Dollar is Finally Getting Invited Back to the Investment Party

The buck is up 6% against the euro in the last three weeks. Notwithstanding problems in Greece and Spain, and the attendant complications for the E.U., this is a pretty good performance.

Illustrating an important lesson. Don't count the dollar out too soon.
Full article at: US Dollar