The inflation picture has stabilized which may lessen fears of deflation. Capacity utilization moved up closer to 70% which means some of the idle factories are starting to be turned on. The auto industry got a boost from the clunkers program, but we will have to see if this production move has legs. The Empire State index also improved so the US is starting to look better, but this also means that there is more risk taking around the world and the opportunities may not be in Treasuries.
The dollar continues to slide and we saw a fall in net long-term flows. We expect to see flows decrease in months not associated with quarter-end, but the the net was worse than expected. The net flows in Treasuries were weak. Agencies and corporates were also weak. Equities were slightly stronger. While looking at flows only helps to explain the past picture, it does provide good insight in the mindset of investors. If risk taking increases, there will be a a movement out of safe assets. This shifting of assets is occurring.
The dollar continues to slide and we saw a fall in net long-term flows. We expect to see flows decrease in months not associated with quarter-end, but the the net was worse than expected. The net flows in Treasuries were weak. Agencies and corporates were also weak. Equities were slightly stronger. While looking at flows only helps to explain the past picture, it does provide good insight in the mindset of investors. If risk taking increases, there will be a a movement out of safe assets. This shifting of assets is occurring.
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