Saturday, August 7, 2010

Japanese Yen strength --- Good answer

Found a good answer of Japanese Yen strength vs. US Dollar on Kathy Lien's blog( She said the 2 years US treasury yield has been in downtrend and moving in locked-step with Japanese Yen. The yield has been declining in anticipation of weak US economy(soft patch) causing the weak US dollar. This was confirmed yesterday when 2 yr treasury yield dipped below 0.5% after released of very slow jobs addition and unemployment was still high at 9.5%. So people will have to sell dollar and buy Japanese Yen to unwind their position.

Bill Gross said the fed is unlikely to raise interest rate for 2-3 years.

(Bloomberg)Pacific Investment Management Co.’s Bill Gross said the Federal Reserve is unlikely to raise interest rates for two to three years as it seeks to keep the economy from slipping back into recession.

Treasury two-year note yields dropped below 0.50 percent for the first time today after the Labor Department said the economy lost more jobs in July than economists forecast. The difference in yields between 2- and 10-year notes is 2.33 percentage points, more than double the average of 1.11 percent for the so-called yield curve over the past 20 years. The spread reached a record 2.94 percent on Feb. 18.

“When you analyze that portion of the curve, it says the Fed is on hold for a long, long time,” Gross, said today during a radio interview on “Bloomberg Surveillance” with Tom Keene. “When you get down to 50 basis points on two-years, that’s giving you a signal that there’s not much left on the table.”

Many of my readers must be wondering why am I posting some of these hard and dry stuffs. There are many investment implications actually. Care to offer some comments/suggestions?

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