Excerpt from: GFT News
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| March 16, 2009 | | U.S. debt becoming a concern on a fundamental level | One of the main concerns in terms of economic fundamentals right now is the attractiveness of U.S. government debt. Last week, the U.S. auctioned off large amounts of U.S. Treasuries, and they were rather popular -- even with low yields. U.S. government debt is still considered a "safe" investment. However, it may not remain a desirable investment.
The biggest holder of U.S. debt is China, and Premier Wen Jiabao made it rather clear last week that his country may not continue buying up U.S. government debt. Indeed, the announcement comes not too long after China announced plans to diversify its investments into Europe and into energy concerns. Clearly, China has other interests beyond supporting the consumerist needs of the U.S.
Another problem is that U.S. Treasuries are flooding the market in order to fund economic stimulus efforts. Eventually, as risk appetite returns, U.S. assets will not be as desirable. And the fundamental fact of U.S. debt will make the dollar weaker going forward in forex trading.
| Topic Tags: China invest Europe, dollar forex trading, forex trading, U.S. debt, U.S. dollar, U.S. Treasuries, Wen Jiabao | |
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