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Subject:  Re: Japan to end interference Date:  3/28/2004  6:23 PM
Author:  splotto Number:  9759 of 35576


Japan has 2 types of US$ buying going on.

1. They have a trade surplus with us (as does most of the world). That means they have a lot of US$'s sitting around every day. They take these US$ and buy treasuries, GSE debt, etc. This helps prop up the prices of bonds, keeping yields low.

2. Japan also intervenes in the FOREX markets to weaken the Yen and drive up the US$. They do this to keep Japanese goods attractive to US buyers (this is important because Japan is an