Central banks are playing hot potato with America’s debt. The first six months of this year saw foreign central banks sell a net $192 billion of U.S Treasury bonds – double that of last year. China, Japan, France, Brazil and Colombia have dumped the most in the largest selloff of US debt since 1978. “Net selling of U.S. notes and bonds year to date thru June is historic,” says Peter Boockvar, chief market analyst at the Lindsey Group, an investing firm in Virginia. U.S. Treasury’s were the safest asset in the world, as many countries hold their cash in U.S. Government Bonds due to post-World War II economic arrangement via Bretton-Woods world order. By selling their holdings of U.S. Treasuries, the nation’s benefit by putting downward pressure on the U.S. dollar relative to their currencies. The lesson: the global economy is still weak. Low oil prices, China’s economic slowdown and a so-called “race to the bottom” as global currencies lose value weigh on what the IMF terms a “fragile” economy in 2016. Private demand for the bonds has skyrocketed as the US pays historically low-interest rates. The 10-year U.S. Treasury, at a record low of 1.34% earlier this year, bounced to about 1.58%. Meanwhile, financial institutions celebrate blockchain technology as a potential boon to the global economy. Financial institutions want to streamline trade. Why? They see the above-mentioned problems as a reason to suspect the US Federal Reserve will increase interest rates, thereby increasing the cost of money. HSBC, upon announcing a partnership with Bank of America Merrill Lynch to experiment with bitcoin inspired technology, told CNBC that the blockchain could be “revolutionary” in international trade and commerce. Bank of America Merrill Lynch and HSBC published recently published proof of concept showing how blockchain could revolutionize trade. “Over $2 […]
