The quantitative work is still underway in the United States, as China appears to be looking to a shorter term commitment in place of long term Treasury notes. The Euro currency, in the mean time, is again testing key resistance levels against major currencies.

Rumors about the U.S. loosing the triple A credit rating are mounting, as China is becoming more careful on where to invest the large amount of U.S. dollars accumulated each year. Recent data seems to confirm that short term notes, in place of long term Treasuries, are becoming more attractive for the Chinese government, whose concerns about the large U.S. debt creating inflation and panelizing the U.S. dollar are growing every day. In effect, U.S. finances are under tight scrutiny by Moody’s Investors Services, albeit there is not an immediate threat. However, some Fed officials are concerned that inflation will strongly pick up following the huge government spending and Fed funds will at some point be increased again. The Minutes from the April FOMC meeting confirmed that the credit and quantitative work is still underway. Only 35% have been covered so far of the almost 2 trillion of various assets to be bought over a relative short period of time.

Angelo Airaghi is a Commodity Trading Advisor, registered with the National Futures Association and the Commodity Futures Trading Commission. He has been an active professional since 1990 working for major international financial companies. In the past 10 years, Angelo Airaghi has been an analyst and commentator for national and international media.

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