Another reason rates may stay Low for Longer

by Laura Ehrenberg-Chesler on October 22, 2015

in Fed policy,Foreign Markets,interest rates

From Ed Yardeni this morning:

Chinese savers seem to be looking for opportunities to invest overseas because investing opportunities at home have turned riskier. The property market has cooled. The stock market has been treacherous, with too much meddling by the regulators. The government’s anti-corruption drive seems to be driving more Chinese to move their money abroad if they can. That’s all corroborated by the capital outflows data discussed above and increasing anecdotal evidence that Chinese money is pouring into real estate markets in Australia, Canada, the UK, and the US. Seems like there is another global savings glut underway. ”

Chinese money will not just flow into real estate, and the stock market, but into bonds as well. With the German Bund, their 10-year, yielding below .75%, the U.S. 10-year looks very attractive at +/-2%.

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