Author: Marc Chandler

More Thoughts about Japan and US Treasuries

More Thoughts about Japan and US Treasuries

If China wants to accumulate reserves, it will have to buy US Treasuries, even if not every month. Japanese institutional investors are thought to be attracted by the high yields available in the US Treasury market.  But, the wider differentials at short-end make hedging the currency risk more expensive

The Yuan’s Reserve Currency Status

The Yuan’s Reserve Currency Status

There is nothing quite like a falling dollar to spur take of the erosion of the greenback’s reserve status. For various reasons, countries have chosen to build reserves. Following the decision to hold or build reserves, the question arises as to what currencies to hold. Here’s a take specifically on the Yuan

Italian Election–Two Months and Counting

Italian Election–Two Months and Counting

Italy’s election has the potential for some surprises. The Five Star Movement, which is polling first in surveys, has pledged a referendum on the euro if Brussels does not change its fiscal rules. Berlusoni’s Forza Italia and Salvini’s Northern League are critical of the EU and EMU, but rather than jettison the euro, they talk about having a parallel currency.

The Importance of China’s New VAT

The Importance of China’s New VAT

Yesterday, China announced one of the most important tax reforms of the past twenty years. It is replacing a business tax on gross revenue for non-manufacturing companies with a VAT. Manufacturing companies have been subject to a VAT approach for a few years. The reform extends it from manufacturing and a few services in a pilot program to industry-wide application. It will now cover construction, real estate, finance and consumer services.