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11/4/2005
The yield on the 30-Year bonds kept going up this week, reaching a level of 4.852% by Friday. This rate is still rather cheap, judging by historical standards, and plenty of credit is still available to borrowers. I actually believe that the rising rates (both short term and long term ones) are very beneficial for the US Dollar. We know that the rates are rising and that the US Government will be borrowing massive amounts of money to cover the deficits, and at the same time we get the messages from the FED, saying that they will not tolerate any inflation. George Soros was the one who came up with this idea, which was quite radical at the time. His fund went long the deutschemark, when the East and West Germany united. My guess is that George is doing the same trade right now...
This is not a trade recommendation and no one should treat it as such.
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