22 Dec 2014
Tides are turning; USD to wash up on top - SG
FXStreet (Guatemala) - The turning tide in Treasury holdings shifts the way money moves round the world, as Kit Juckes, head of global strategy at Societe Generale explained.
Key Quotes:
“There are still doubters who think the Fed will remain on hold through 2015 but after last week's FOMC meeting they're going to need some softer data to support their view. The Fed has finished its bond-buying programme and is on track to raise rates in 2015”.
“There will be other major buyers of government debt in 2015 - the BOJ for sure and probably the ECB too. But in 2 or 3 years' time the ownership of the US government bond market will have changed. It will be less foreign and less dominated by central banks”.
“US private sector investors, who were squeezed out by the Fed, will stay home. And foreign central banks, forced to buy US assets to prevent their currencies appreciating, may instead be selling to support their currencies”.
“And as the tide turns, the result will be reduced appetite for emerging markets and corporate bonds globally, as well as keeping more in US dollars”.
Key Quotes:
“There are still doubters who think the Fed will remain on hold through 2015 but after last week's FOMC meeting they're going to need some softer data to support their view. The Fed has finished its bond-buying programme and is on track to raise rates in 2015”.
“There will be other major buyers of government debt in 2015 - the BOJ for sure and probably the ECB too. But in 2 or 3 years' time the ownership of the US government bond market will have changed. It will be less foreign and less dominated by central banks”.
“US private sector investors, who were squeezed out by the Fed, will stay home. And foreign central banks, forced to buy US assets to prevent their currencies appreciating, may instead be selling to support their currencies”.
“And as the tide turns, the result will be reduced appetite for emerging markets and corporate bonds globally, as well as keeping more in US dollars”.