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Americans buy record foreign bonds and stocks in September – BBH

FXStreet (Barcelona) - The Research Team at Brown Brothers Harriman note that Americans bought $30bln of foreign shares and $40 bln of foreign bonds in September.

Key Quotes

“Americans bought $30 bln of foreign shares in September. Before 2000, the most was about $10 bln. The previous high was set in the notorious October 2008, when Americans bought $21.4 bln of foreign equities. Americans bought $40 bln of foreign bonds in September. Since 2007, investors bought around $30 bln on two occasions.”

“One explanation is that American investors took advantage of the dollar's rally to scoop up foreign assets on the cheap.”

“It could be the dollar's contemporaneous performance was irrelevant, and that the purchases were done mostly on a hedged basis, based on anticipated futures trajectory of the dollar.”

“Previously it was difficult for retail investors to hedge their foreign equity holdings, but ETFs have been developed that allow investors to buy the Nikkei and hedge the yen, such as DXJ and HEDJ, which does the same thing for European equities.”

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