Overseas investors reduced their investments into U.S. Treasury bonds in favor of putting more into U.S. stocks. Does this mark a turn for the better for U.S. markets and exchange traded funds (ETFs)?
Foreign investors slowed their purchases of Treasuries to $81 billion in September from $137 billion in August and bought $22 billion in stocks, or almost double their equities purchases in the last three months combined, reports Colin Barr for Fortune. IHS Global Insight economist Gregory Daco believes that “this shift illustrates investors’ confidence about U.S. recovery prospects.” [Treasury Bond ETFs Move Big.]
“Stronger growth evidence in the U.S. will prop up demand for equities, while on the other the resurgence of sovereign debt worries in Europe will lead foreign investors back into safe haven U.S. Treasuries,” Daco adds.
“The combination of a weak dollar and slow growth prospects in Europe and Japan (despite a surprisingly strong third quarter) should continue to boost demand for U.S. securities,” said Daco.
And it works both ways – for businesses to be successful these days, a global mindset is needed. According to British Enterprise Minister Mark Prisk, a true global business requires developing a world enterprise program that provides guidance to smaller firms, international trade advisors should work together and emerging markets need to “stop being so coy” and engage in early economic talks, writes Helen Loveless for FMWF.