Global US Dollar Credit

In a paper published, in early 2015, by the Bank for International Settlements the authors successfully demonstrate that, while global banks are deleveraging, and reducing their US dollar credit to non-US borrowers, the Federal Reserve’s attempts at compressing the term premium, via its portfolio rebalancing channel, has pushed global bond investors away from low yielding US Treasuries and into higher yielding US dollar bonds issued by non-financials outside the US, more than offsetting the slowing credit growth of banks. Please click here to continue reading.