“[W]ill these investors be happy sitting in these US treasuries with rates below 1% on short term bills and a top rate of just 3.93% on the 30 year bond? Why would anyone be happy holding these treasuries when their real yields (adjusted for inflation) are actually negative? Inflation in the US will be reported this morning, and is expected to show the Consumer Price Index rose 5.5% from August of last year. So while investors may have gone to Treasuries as an immediate knee jerk reaction to the crisis, I don’t expect them to stay there long. The smart investors will start to look for other places to move these funds. And right now, the best opportunities are in markets outside of the US dollar. If the FOMC does decide the lower rates today, or generates a dovish statement, investors will begin to move back into the better prospects which can be found in countries outside of the US.”
