Noise on the Global Trade Scene

After studiously avoiding it, I had been about to write a post on the Greek debt crisis, the Eurozone problems, and how they are so similar to the US and China. This was prompted by all of the verbal sparring over the weekend, and the letter to Treasury and Commerce signed by 130 US Congresspersons. A rare display of bi-partisanship, that.

Before committing thought to virtual paper, Martin Wolf in yesterday’s Financial Times expressed it very nicely, so I will refer the reader there. For my part, I don’t think the Chinese – or the Germans – are silly enough to want to kiss off their best customers. All of the noise is intended for the consumption of their internal audiences. What I do think, however, is that the Euro, after a counter-trend rally, is heading lower. I also think the emerging markets, especially emerging market bonds, which are at a record low yield spread vs. US Treasuries, are a bit too rich here and due for a healthy correction.

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