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The Rug Pull on Global Liquidity | Brent Johnson on Unwind of the Yen Carry Trade, and the Exaggerated Rumors of the Dollar’s Demise

Forward Guidance

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The Global Impact of Rising US Treasury Yields on Liquidity

The VanEck Morningstar-wide Moat ETF has consistently outperformed the S&P 500 by strategically purchasing high-quality stocks when undervalued and selling them when overvalued. The rising US Treasury yields, currently around 4-5%, create a funding challenge not only for the United States but also for other global economies. As US yields increase, they significantly affect international capital flows, compelling other entities to offer higher yields to attract investment. Emerging markets, in particular, face severe competition for liquidity, as they must yield more than the US Treasury to entice investors. This dynamic leads to widespread implications where higher US rates could constrain funding availability for developing nations, ultimately creating a liquidity nightmare for emerging markets, which historically struggle for access to capital even in stable conditions. Thus, elevated US interest rates can diminish global investment attractiveness outside of US Treasuries, exacerbating financial challenges worldwide.

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