The cheapest dollars in recent years have spurred an increase in foreign investment in US Treasuries, while pension funds are increasing their holdings and rising demand is squeezing interest rates on US Treasuries even as the economy strengthens. there’s a possibility that.
The WSJ dollar index, which measures the greenback against a basket of currencies, has fallen 2.9% so far this quarter and has been near its lowest level in about five months. Deutsche Bank’s analysis shows that the price of hedging the dollar at futures rates was also the lowest in at least six years last week and remains close.
“As with many investors, if I buy the bond market, I buy US Treasuries,” said Laurent Crosnier, chief investment officer at the London branch of Amundi, Europe’s largest asset manager. Probably. ” “US Treasuries are more attractive than other countries” due to their positive yields and low hedging costs.
Benchmark yields on 10-year Treasuries fell below 1.5% earlier this week and closed at 1.458% on Thursday. This is the lowest level since March 2nd.
Government bonds are popular during times of economic downturn in terms of security and liquidity. The recovery from the pandemic is widely expected to result in reduced holdings as fund managers place portfolios at better times and with less uncertainty. Investors widely expect rising inflation due to a combination of excessive demand, supply constraints and stimulating spending. This is also considered negative for traditional bonds, where fixed cash flow loses purchasing power as prices rise.
Cheap dollars attract foreign investors to government bonds
Source link Cheap dollars attract foreign investors to government bonds