4 ms·

For people who conduct their transactions in $'s, sure. But Europeans buying US Treasuries would be subject to currency risk, which could easily wipe out that 5

by PKop 3y ago

For people who conduct their transactions in $'s, sure. But Europeans buying US Treasuries would be subject to currency risk, which could easily wipe out that 5% APR

radicaldreamer 3y ago
Europeans have their pick of yields for Euro-Area 3 month sovereign bonds https://www.investing.com/rates-bonds/european-government-bonds https://www.investing.com/rates-bonds/european-government-bo...
- splittingTimes 3y ago
  How as a German could I buy or sell islandic or Hungarian bonds then? Do you need a bank account in those countries? If I take short term 3M bonds and they become due, then I pay taxes where?
  - hrpnk 3y ago
    Individual corporate and government bonds are traded on the German stock exchanges. A regular brokerage account is sufficient to purchase these (e.g. Flatex). Tax statements are typically handled by the broker. - DE: https://www.boerse-stuttgart.de/de-de/tools/produktsuche/anleihen-finder/?legalNameIssuer=Bundesrepublik%20Deutschland https://www.boerse-stuttgart.de/de-de/tools/produktsuche/anl... - HU: https://www.boerse-stuttgart.de/de-de/tools/produktsuche/anleihen-finder/?legalNameIssuer=Ungarn%2C%20Staat https://www.boerse-stuttgart.de/de-de/tools/produktsuche/anl... (investment in tranches of 1k, 2k, 10k, or 100k) - IS: https://www.boerse-stuttgart.de/de-de/tools/produktsuche/anleihen-finder/?legalNameIssuer=Island%2C%20Staat https://www.boerse-stuttgart.de/de-de/tools/produktsuche/anl... (investment in tranches of 100k)
kgwgk 3y ago
> But Europeans buying US Treasuries would be subject to currency risk, So would Europeans buying Verizon which was the example that your parent replied to.
- PKop 3y ago
  Yes definitely, I didn't mean to imply therefore US stocks are the better choice, only that US fixed income isn't some straightforward escape hatch for Europeans.
  - kgwgk 3y ago
    Agreed. But EU fixed income is becoming very attractive and 3% risk-free short-term government debt (that can be easily bought directly from the government with minimal fees at least in some countries) is much better than a bank account paying 0% (or maybe more but probably in a less solid bank).
    - PKop 3y ago
      Yes, that's what I would suggest and do myself if I was European, not buy US treasuries.
oblio 3y ago
Only if the Euro appreciates, which is unlikely in case of a recession.
- PKop 3y ago
  "Only if"..well yea. And why wouldn't it? I don't know what you're basing your thesis on, it is very common to have currency moves in either direction that massively exceed the differential in US vs Euro rates. Making bets on how it plays out is also a big market, but in that case you're a currency trader...is that the type of risk profile of a non-trader looking for short term fixed income/savings? I doubt it. One should probably default to making returns in the currency they buy things and pay taxes in unless there's an obvious reason not to. Trying to make an extra ~2% on short term rates seems like picking up nickels in front of a steam roller. Euro is up like 16% from the bottom last summer, and when it trends it can go for a while. Sounds risky.
- piperswe 3y ago
  Or if the USD depreciates, which is much more likely in case of a recession

by PKop 3y ago

For people who conduct their transactions in $'s, sure. But Europeans buying US Treasuries would be subject to currency risk, which could easily wipe out that 5% APR

radicaldreamer 3y ago

Europeans have their pick of yields for Euro-Area 3 month sovereign bonds https://www.investing.com/rates-bonds/european-government-bonds https://www.investing.com/rates-bonds/european-government-bo...

splittingTimes 3y ago
How as a German could I buy or sell islandic or Hungarian bonds then? Do you need a bank account in those countries? If I take short term 3M bonds and they become due, then I pay taxes where?
- hrpnk 3y ago
  Individual corporate and government bonds are traded on the German stock exchanges. A regular brokerage account is sufficient to purchase these (e.g. Flatex). Tax statements are typically handled by the broker. - DE: https://www.boerse-stuttgart.de/de-de/tools/produktsuche/anleihen-finder/?legalNameIssuer=Bundesrepublik%20Deutschland https://www.boerse-stuttgart.de/de-de/tools/produktsuche/anl... - HU: https://www.boerse-stuttgart.de/de-de/tools/produktsuche/anleihen-finder/?legalNameIssuer=Ungarn%2C%20Staat https://www.boerse-stuttgart.de/de-de/tools/produktsuche/anl... (investment in tranches of 1k, 2k, 10k, or 100k) - IS: https://www.boerse-stuttgart.de/de-de/tools/produktsuche/anleihen-finder/?legalNameIssuer=Island%2C%20Staat https://www.boerse-stuttgart.de/de-de/tools/produktsuche/anl... (investment in tranches of 100k)

kgwgk 3y ago

> But Europeans buying US Treasuries would be subject to currency risk, So would Europeans buying Verizon which was the example that your parent replied to.

PKop 3y ago
Yes definitely, I didn't mean to imply therefore US stocks are the better choice, only that US fixed income isn't some straightforward escape hatch for Europeans.
- kgwgk 3y ago
  Agreed. But EU fixed income is becoming very attractive and 3% risk-free short-term government debt (that can be easily bought directly from the government with minimal fees at least in some countries) is much better than a bank account paying 0% (or maybe more but probably in a less solid bank).
  - PKop 3y ago
    Yes, that's what I would suggest and do myself if I was European, not buy US treasuries.

oblio 3y ago

Only if the Euro appreciates, which is unlikely in case of a recession.

PKop 3y ago
"Only if"..well yea. And why wouldn't it? I don't know what you're basing your thesis on, it is very common to have currency moves in either direction that massively exceed the differential in US vs Euro rates. Making bets on how it plays out is also a big market, but in that case you're a currency trader...is that the type of risk profile of a non-trader looking for short term fixed income/savings? I doubt it. One should probably default to making returns in the currency they buy things and pay taxes in unless there's an obvious reason not to. Trying to make an extra ~2% on short term rates seems like picking up nickels in front of a steam roller. Euro is up like 16% from the bottom last summer, and when it trends it can go for a while. Sounds risky.
piperswe 3y ago
Or if the USD depreciates, which is much more likely in case of a recession