Daniel Kruger
speaker
39 appearances
1 recordings
1 series
first heard May 2018
last heard May 2018
Daniel Kruger’s voice in public audio — every appearance, attributed to the second.
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Appearances
WSJ Your Money Briefing · Could Rising Bond Yields Deflate the Housing Market? · 25 May 2018
podcast
They don't have to buy high-dividend stocks if they want to receive a certain amount of income on their investments.
They have the option of very safe treasury bonds.
And some investors would prefer that.
They don't want to take the risk that their utility stocks are going to fall in value.
That's right.
One thing that we've seen is that as the U.S.
economy has gotten stronger, the European economy has gotten weaker.
And that wasn't something people expected at the start of the year.
And so an unexpected thing has happened.
The U.S.
dollar has risen in value against the euro.
and a lot of people had gone into the year thinking the reverse would happen, and so there were a lot of investors who had put on bets that the dollar would fall and the euro would rise, and as the reverses happened, they've had to get out of those bets, and it's caused a bit of a squeeze in the currency markets, and it's really pushed the dollar higher in value.
Right.
And what happens as the dollar rises in value is that this year, it doesn't always happen this way, but this year it's pushed treasury yields higher because foreign investors, if they want to buy treasuries, they need to hedge currency risk.
They need to try and find a way to eliminate the risk of
of changes in the value of currencies.
And as that gets more expensive to do, fewer people want to do that.
And this leads to higher interest rates in the U.S.
because it's just not a trade that a lot of people want to put on.
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