Since early 2002, the US Dollar Index dropped 32.9% from 120.51 to 80.91.
During the same period, the Ten-Year Treasury Note Yield dropped 24.6% from 5.448% to 4.106%. Although more recently, since mid-2003, yield has increased 38.1% from 3.083% to 4.258%. Normally, however, when the USD goes down over a period of time, long-term interest rise. If that were proportionately true … and it need not be … but if it were, the ten-year yield would be about 7.24% today (32.9% higher from 5.448% in early 2002)
What would that do to the US housing market, auto/truck sales, personal bankruptcies, the US banking industry and US consumer spending in general?
So if long-term rates are not to rise significantly from here, why are Alan Greenspan, the Bush administration and the US Treasury Department helping to push the dollar down even further? The answer (or at least my answer) … It is the only solution to our huge economic imbalances.
Do you think Wall Street might be aware of this?……….. you betcha.
But being the truthful sort that they are, and looking out for the best interest of all the retirees who are relying on their mutual funds for retirement … <g>, Wall Street, CNBC etc. are bullish on the stock market and corporate profits from now well into 2005. Maybe that is why US Corporations are holding onto their cash with a tight fist, and limiting their hiring so carefully … <g>
Just to keep you thinking in this wonderfully recovering (and improving US) economy … <g>
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