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Foreign Debt Could Be a Smart Bet Given the Weakness in the USD
With domestic interest rates hovering around zero, is it time for debt investors to look beyond U.S. borders?
Issues of foreign bonds are at their highest levels since they were first tracked almost 50 years ago, thanks to the higher yields found in such emerging markets as China, Brazil and Russia. In the first half of this year, bond volumes rose to $352 billion, according to Thomson Reuters, an increase of 45% from the same period in 2007 – which was before the global financial crisis took hold in the world’s capital markets.
“Although emerging market bond spreads have narrowed, they…
28Jul2009 | Money Morning | 5 comments | ContinuedWhy We Need A Weak Dollar
Two weeks ago, at a financial conference, a member of the audience asked an all too familiar question, “What’s your view on the U.S. dollar?”
Long-time readers know I never shy away from this topic.
In fact, last year, when everyone else believed the world’s reserve currency was about to be usurped by the euro, I predicted it would rally and we would see the end of the weak dollar. And rally it did. After the impressive move, of course, I changed my stance on the falling dollar.
And since that time I’ve only become more convinced the U.S. dollar is doomed to…
18Jun2009 | Investment U | 0 comments | ContinuedChina’s Investment Alternatives: Why China Can’t Sell U.S. Treasuries
As if we needed something else to concern ourselves with, the Is-China-Going-To-Start-Selling-Treasuries worry mill is cranking up… again. It seems every once in awhile – and more so lately – the financial pundits begin to climb the China wall of worry.
And it’s not an unreasonable question: Last year, China became the biggest foreign holder of U.S. securities, when it plunked down almost $66 billion for them in October alone.
With that big of a stick, some believe that China could bring down the U.S. without ever setting foot here.
Others feel it already is, by artificially setting the rate at which its…
18Feb2009 | Investment U | 0 comments | ContinuedForeign Economies Must “Decouple†from the United States by Suspending Lending to U.S. Consumers
Economists, who now see American troubles spreading around the world are predicting that foreign central banks will ignore the gathering inflation threat and follow the U.S. Federal Reserve down the rate-cutting path. Similarly, they argue that since the downturn began here, the recovery of the U.S. economy will likely be under way while the rest of world is still decelerating.
These assumptions have prompted a recent rally in the U.S. dollar, and an accompanying sell-off in gold, commodities and foreign stocks, and have cast doubts on the ability of foreign economies to economically “decouple” from the United States.
But investors…
21Aug2008 | Money Morning | Comments Off | ContinuedA Weak Dollar and Sluggish U.S. Economy Accelerate Toyota’s Retreat to Emerging Markets
A weak dollar and an even weaker U.S. economy have proved to be serious roadblocks for Toyota Motor Corp. (TM), which reported a 28% decline in net income for its fiscal fourth quarter.
The company said it expects its first annual profit drop in nine years to occur in fiscal year 2009, despite strong sales in developing markets.
High oil prices helped boost the sale of smaller more fuel-efficient cars in the United States, but overall region sales declined. Fourth-quarter sales of the Toyota Yaris were up 58% and Prius sales shot up 23%. Still, Toyota’s total North American sales fell…
9May2008 | Money Morning | Comments Off | ContinuedWith a Rate Decision, GDP Report Due Today, the Fed Walks the High Wire Again
If U.S. Federal Reserve policymakers make the expected quarter-point rate cut at the end of their meeting today (Wednesday), the impact will be felt well beyond U.S. borders.
Indeed, the interest-rate reduction could set in motion a series of diverse global events that will impact such seemingly unrelated areas as European inflation, global food prices, the U.S. dollar, American exports, and the already chilly relationship between the European Central Bank (ECB) and the government of France.
For any of this to happen, however, the Fed first has to act. Most observers believe the U.S. central bank’s policymaking Federal Open Market Committee (FOMC) will…
30Apr2008 | Money Morning | Comments Off | Continued
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