12.08.2015 - Why China’s yuan devaluation is good for Treasury investors
Demand for long-term Treasury bonds has been rising over the past four weeks, as an overarching flight-to-safety theme has emerged out of the global rout in commodities sparked in part by worries about a slowdown in China’s economy. A surprise devaluation of the Chinese yuan by the People’s Bank of China enhanced the flight-to-safety theme on Tuesday and sparked further demand for long-term Treasury bonds. A broader strategy is emerging, where Treasury investors have been moving money from short-term to long-term Treasury bonds causing a phenomenon that is known as a “flattening yield curve.” “Most [Treasury investors] seem to be playing the curve flattening strategy ahead of the Fed’s September meeting,” Tom di Galoma, head of rates and credit trading at ED & F Man Capital Markets, said in a note...............................................Full Article: Source
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