What Are Bond Yields Telling Us?

T2W Bot

Staff member
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I’d like to bring up a topic that is rarely discussed and that is bonds. I’m not talking about futures contracts on bonds, but what bonds are and what they are telling us about individual countries today.
Before we get to the actual bond discussion, we have to understand a bit about currency strength and weakness and how it affects a nation’s economy. Take a look at your chart of the EURUSD, going back over a couple of years. You can see that the EURUSD has been trending down for several months, indicating a stronger USD vs. a weaker EUR. So who benefits from a stronger local currency, and who is hurt? The beneficiaries of a stronger local currency are the people who do more purchasing of imported goods. As the USD increases in strength vs. the EUR, any goods that are imported from the Eurozone will be cheaper. In this very basic Economics 101 discussion, a stronger dollar means when I purchase a new European car, or suit, or wine, they should be cheaper today than a couple of...

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