7 / 24
DX ~ Monthly
Moody's weekend credit downgrade of US debt doesn’t change the fact that the US dollar and US debt are the most tolerable porta-potties at a hot and humid seaside music festival (I spent last weekend at Sand in My Boots in Gulf Shores, so I am an expert in this field). There is nowhere else to go to get the same type of yield per unit of risk, liquidity, and price stability. Yet, many sellers are doing so because they must, not because they want to. For instance, the credit downgrade probably forced the hands of some fund managers and even foreign governments. The Bank of Japan is said to be limited to the percentage of its sub-AAA portfolio, which requires some indiscriminate trimming.