Salient to Investors:
Foreign investors can’t get enough Treasuries despite the fiscal cliff and China’s reduced stake.
Aaron Kohli at BNP Paribas said there’s little of a buyers’ strike from the Treasury’s perspective and shows the depth of demand.
BNP forecasts the 10-year yield will rise to 2 percent by June 2013 versus the 5 percent average since 1990.
Japan has raised its stake by 6.9 percent in 2012 and is on pace to surpass China atop the list of foreign creditors by January.
Win Thin at Brown Brothers Harriman said the drop in holdings by China reflects a rebalancing of their economy.
Carl Lantz at Credit Suisse said the US remains the best option reserve currency. Credit Suisse raised its year-end forecast for the 10-year Treasury yield to 1.75 percent on expectations the US will avoid the fiscal cliff.
The IMF says the dollar’s share of global reserves was 61.9 percent onf June 30, the euro’s share was at 25.1 percent.
The median economist expects GDP to increase 2.2 percent in 2012, 2 percent in 2013 and 2.75 percent in 2014, and versus 1.28 percent in 2012, 1.3 percent growth in 2013 and 1.98 percent in 2014 for G-10 nations.
Scott Colyer at Advisors Asset Mgmt said we have a free and open economy, a bold Fed, and we have fixed, fundamentally, the problems. Colyer stopped buying Treasuries last year on the expectation the next significant move in bond prices will be down as either the economy improves or the market perceives its debt burden as untenable.
Jack McIntyre at Brandywine Global Investment Mgmt has reduced his Treasury holdings and is buying local-currency Brazilian debt.
Larry Dyer at HSBC said that as long dollars flow out, people are going to buy something with it, and the first stop is likely to be Treasurys.
Read the full article at http://www.bloomberg.com/news/2012-11-19/treasuries-foreign-buying-doubles-china-s-sales.html