Oct

14

The Dollar, from Duncan Coker

October 14, 2010 |

 With the dollar being so despised and the revulsion to owning green backs, with Aussie near parity, Euro at 1.4, gold, silver, corn, wheat, sp ,etc all at or near extremes, I wonder when the vigilantes will get around to the bond market. That too is dollar denominated, and of course you can't fight the fed on the short end of the curve, but the long end once was held in check. It reminds me of Ed Spec when every one wanted goods and no one wants to hold cash, then a speculator obliges.


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  1. Alaric Investments on October 15, 2010 2:27 pm

    These days, I would be very careful when relating the performance of treasuries (ie, US rates) to performance of the dollar…

    There is precedent for the successful manipulation of US rates - ie, during WWII the Fed successfully held long term interest rates below 2.5% (see link below)….this could be accomplished again, although there would have to be the political will.

    Manipulating rates would be easier than manipulating the dollar, however…. Constraining dollar movements would require capital controls while putting a ceiling on 10 year treasury rates would simply require the printing of enough dollars to buy them.

    It would appear that market participants today were expecting more certain and forthright expressions by Mr. Bernanke regarding “QE II” (treasury buying, US rate caps, etc), and so we have a temporary reversal in both the dollar and rates — however, to link the performance of US rates to the dollar would be to ignore the power of the Bernanke ‘printing press’….

    https://alaricinvestments.wordpress.com/2010/10/12/during-wwii-the-fed-successfully-targeted-10yr-rates-at-2-5/

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