Just as a kid needs some love from his parents after he or she gets into trouble and confirmation that they’ll still get their weekly allowance, Japan’s Finance Minister said “The US $’s position as the world’s reserve currency isn’t under threat…Our trust in US Treasuries is absolutely unshakable.” Hopefully the child grows up at some point and learns to live with less financial help from its parents. Japan is the 2nd biggest foreign holder of US Treasuries and they join China in defending their rather large investment. Combining these comments with the solid 30 yr auction and today’s WSJ saying the Fed will unlikely boost the size of their asset purchases beyond what’s already in place, are sending yields to their lowest of the week. With mortgage rates, its welcome relief as we end the week with the avg 30 yr rate at 5.70%, according to Bankrate, up 70 bps in just 3 weeks. Confidence is out today.
