With so many conflicting signals about markets, the economy in the U.S. and abroad, the impact of the China-U.S. trade war, and more, what’s an investor to think?
The currency measure Colas prefers is called the Trade Weighted U.S. Dollar Index: Broad, Goods, and it’s hovering around all-time highs — although data only goes back to the mid-1990s. The index tracks how well America’s currency is performing against currencies for other countries with whom the U.S. has a trading relationship.
Fact check: true. It does make it harder for American companies that export to remain profitable when the currency is higher. But focusing only on manufacturers misses a lot of the bigger context, as well as why things are so complicated right now for the dollar. As Colas notes, it’s not just the trade war, and the corresponding 6% hit to the yuan, that’s keeping the dollar index so high. The euro, which has the biggest position in the index, “is 11% lower from its March 2018 high-water mark, back when the German 10-year bund was yielded +0.6% instead of its current -0.4%.”Why would investors chase a yield of -0.4% when they could pick up 1.7% on the U.S. 10-year bond TMUBMUSD10Y, -1.
This is sad. This is a collection of “experts” trying to convince the public that, with realDonaldTrump, even good equals bad. , you need to be better. newscorp, you need to be better. This now more of a supply-and-demand economy the way it is supposed to be.
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