Yup, rates are going thru the roof. For instance, the 10 year US Treasury. 4.6%. We're doomed!
Here's what Trader Dan from JSMineset has to say on the subject:
Net Flows and Treasury Purchases
Dear Jim,
Attached are two charts – the first details the balance of trade and compares it to net capital flows for each month. As you can clearly see, this morning’s report on net flows was abysmal. The shortfall was the largest in the last 3 years detailed on this chart, coming in at - $35 billion.
The second chart details the rate of purchase of Treasuries by the big three Asian economies, China, Japan and S. Korea. I have also included Great Britain since I believe there are some “funny” goings on there with hedge fund buying of US paper going through London. Needless to say, they have been carrying the slack in the US debt market. Look at the huge percentage increase coming from Great Britain for the last two months when compared to 12 months ago.
In another one of those “counterintuitive” and “perverse” moves in the dollar that we are becoming accustomed to of late, the dollar basically shrugged off the data and instead, participants chose to focus instead of the G7 communique which was viewed as less “threatening” to the Asian currencies and thus dollar bullish.
As long as the interest rate differential between the yen and the dollar is where it is, the yen carry trade will remain in full force. This could help to explain the huge surge in Treasury buying out of London but I am convinced there is more to that than meets the eye. Regardless, the yen has become the whipping boy against the Euro and the dollar as a result. It seems as if everyone and their mother is selling the hapless thing. The Japanese monetary authorities must be jumping up and down in uncontrollable joy.
Best wishes from your pal,
Dan
Two PDF charts:
http://www.jsmineset.com/cwsimages/Miscfiles/3422_Charts_for_09-18-2006.pdf
Treasury yields keep going lower, especially the past two trading days, in spite of the inflows. One factor I rarely see mentioned is that corporations are flush with cash. They are paying off their debts, and they aren't borrowing enough money to push up rates.
Yup, rates are going thru the roof. For instance, the 10 year US Treasury. 4.6%. We're doomed!