Doomsayers have warned for years that a sharp drop in the dollar could scare away foreign investors in US Treasury's and send interest rates soaring. The good news, just the opposite is happening.
The dollar has fallen in value by 4.6% against a broad swath of currencies over the past three months, according to the Federal Reserve. Over the same time, investors have flocked into government bonds, sending yields on 10-year US Treasury notes to about 4% from 4.6%.
Net foreign purchases of US Treasury's in September totaled $26.3 billion, above 2006 average monthly purchases of $17.3 billion. Foreign investment purchases are fleeing US corporate bonds, down 76% from one year ago.
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