Big Foreign Buyers Likely to Stick With Treasuries Despite Downgrade

[Eugene]

Source: Bloomberg

Big Foreign Buyers Likely to Stick With Treasuries Despite Downgrade

By Christopher Anstey and Shamim Adam - Aug 7, 2011 11:00 AM AT

Asian states are likely to retain their U.S. Treasury holdings for now and European governments have expressed confidence in the world’s largest economy after Standard & Poor’s cut the U.S.’s sovereign credit rating to AA+.

South Korea affirmed confidence in Treasuries after an emergency meeting of officials yesterday to prepare for any financial market fallout. Russia said the one-step cut “can be ignored,” and France questioned S&P’s reasoning. China’s official Xinhua news service said in a commentary that the U.S. must cure its “addiction” to borrowing.

For all the angst, policy makers across Asia are lured to Treasuries as a result of efforts to stem gains in their currencies against the dollar, which would impair export competitiveness. China has accumulated $1.16 trillion of the debt and is the largest individual foreign holder. Japan’s efforts to weaken the yen boost that country’s demand, and Vice Finance Minister Fumihiko Igarashi said yesterday that the Japanese government is ready to intervene again after selling the currency on Aug. 4.

“Our faith in U.S. Treasuries has not changed,” Yim Jong Yong, South Korea’s vice finance minister, told reporters yesterday in Gwacheon, south of Seoul, after meeting with counterparts from the central bank and financial regulators. The nation will step up monitoring of capital flows and currency movements because of the risk of volatility from the downgrade and Europe’s debt crisis, he said.

-snip-

Read more: http://www.bloomberg.com/news/2011-08-07/biggest-foreign-buyers-to-stick-with-treasuries-after-downgrade.html

[ixion]

1. hmmm... okay, we'll just have to see if that's true or not

because I'm skeptical.

[ixion]

2. As I suspected, that is a line of BS trying to head off the inevitable

it failed miserably.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x4951538