Begin forwarded message:
From: Torsten Slok <
Date: March 1, 2018 at 9:42:09 AM EST
To: undisclosed-recipients:;
Subject: DB: Foreign demand for US credit weakening
When the ECB introduced negative interest rates in 2014 many European and Asian investors
started buying US rates and also the next-door neighbor to US rates namely US IG. With higher
US Treasury yields, rising hedging costs, a falling dollar, and signs that the ECB will end QE in
September foreign demand for US credit is slowing, see chart below. Expect this to continue
going forward. Happy to discuss further, let your DB sales contact know.
ECB exit and higher US Treasury yields
leading to less demand from abroad for US IG
S billion Net foreign purchases of US corporate bonds S billion
30 - 30
25
20 -
- 20
I
10 -
15
0 10
-10 -
When ECB put interest rates ...with ECB signaling
-20 - negative in 2014 the rest of the QE exit foreigners
world started buying US credit... are now net seners
of US credit
-30 -10
10 11 12 13 14 15 16 17
Deutsche Bank Research So-
t.° aft
108
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Torsten Stoic Ph.D.
Chief International Economist
Managing Director
Deutsche Bank Securities
60 Wall Street
New York, New York 10005
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