The Fed auctions off treasuries to meet our debt requirement. They are sold domestically and
internationally. The rates are impacted by other factors beside supply and demand. You are right, why buy treasuries at just under 2% when you can buy a high dividend stock that is kicking off 5%. Some people don’t like risk and feel safer in US bonds and treasuries.
There are a couple issues here. The US is the world’s reserve currency. All commodities are bought and sold in dollars. So every country must buy dollars to maintain their currency balances. Secondly, a lot of EU countries at in or close to a recession. So they will swamp Europe with Euros that will lower Bund rates in Germany and others making US treasuries more attractive.
Trump wants the Fed to response since a stronger dollar weakens US exports. Imagine paying Germany to buy 47% Bunds.
So with the highest interest rates being paid and the dollar so strong it’s hard for the US to compete against other countries that are manipulating their currencies.
There are a couple issues here. The US is the world’s reserve currency. All commodities are bought and sold in dollars. So every country must buy dollars to maintain their currency balances. Secondly, a lot of EU countries at in or close to a recession. So they will swamp Europe with Euros that will lower Bund rates in Germany and others making US treasuries more attractive.
Trump wants the Fed to response since a stronger dollar weakens US exports. Imagine paying Germany to buy 47% Bunds.
So with the highest interest rates being paid and the dollar so strong it’s hard for the US to compete against other countries that are manipulating their currencies.
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