Tuesday, July 12, 2011

"Bloodbath" in Euro affects US interest rates and trade deficit

The uncertainty about the future of the European Union is causing investors to sell euros to buy dollars in order to purchase safer US Treasury bills. The increase in demand for US debt is reducing interest rates in the US,

The price of the 10-year note is up 9.4 cents for every $100 invested in early afternoon trading. The higher price lowered the yield to 2.91 percent from 2.93 percent late Monday. Long-term interest rates are near their lowest levels this year.

and strengthening the dollar, which reduces demand for our exports increases demand for imports.

The best currency forecasters say the dollar’s 12 percent slide over the past year is coming to an end as Europe’s deepening debt crisis discourages bets against the world’s reserve currency.

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