Monday, 7 May 2018

The oil price and the US bond

The oil price rises again due to the Venezuela and Iran worries. It seems 2018 is very likely to have great pressure on the oil market. Russia and the US are competing their political influence in Syria. Meanwhile, China and the US are fighting over trade, and the US has put almost unreasonable demands on the negotiation table with China. These all create global political tension.

When the global tension increases, we will expect more uncertainty appears in the global market and the financial market should fall on increasing uncertainty. On the other hand, investors will switch to more secure assets, such as the government bonds. The US bonds have been investors' best choices for safe security holdings. However, under today's circumstance, some investors may ask if the US Treasury Bills are still solid secure.

I do not think that the results of the US-Russian competition and the US-China competition will affect the security of the US Treasury Bills, unless if a war happens. As we can see that although Britain is no longer that Empire, its government bonds remain solid secure and I believe this will also happen to the US government bond no matter the results of the competitions the US is fighting.

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