Odd Lots Why Foreign Investors Cooled On U.S. Debt
Apr 15, 2019
In this session, Zoltan Pozsar, a strategist at Credit Suisse and former U.S. Treasury advisor, delves into the reasons behind the decline in foreign investment in U.S. debt. He highlights key changes in global money markets and the impacts of fiscal year-end stress, particularly for Asian investors. Pozsar discusses how regulatory shifts and evolving credit versus currency risk assessments play a critical role in foreign institutional investors' strategies. This shift could foreshadow significant implications for Federal Reserve policies and market stability.
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Money Market Definition
- Money markets encompass short-term financing, from overnight to three-month durations.
- They are hierarchical, reflecting term, institutional, and instrumental aspects.
Money Market Players
- Various players participate in money markets, including governments, banks, and carry traders.
- These players utilize short-term borrowing for trades, aiming to profit from spreads.
Money Market Size
- The money market is enormous, exceeding $5 trillion, possibly reaching $7 trillion.
- Key components include government bills, bank HQLA portfolios, and the FX swap market.