Yes, agreed. Can use the $euro as an example of the yield arbitrage for what is going on with the $usd. Why would investors in Europe buy $euro denominated 10yr paper for less than 1% when they can by $usd 10yr for 2.5%? Added to this the 1.25 $eurusd exch rate, and then use the yield arbitrage to compound the FX gain (driving the USD higher, euro lower). Since the investment is in USD, when the cycle is finished, converting back to $euro at 1.1 or better is a much more favourable exch rate which compounds the yield earned on the treasuries.
Everyone justifiably rubbishes the $usd, but IMHO it is in fact yield arbitrage that constantly drives the fx cycles - with the $usd going up now due to yield premiums offered in the US. This can occur for any asset class, and is particularly obvious during 2008/2009 wild currency swings around the planet. Massive gains (and massive losses) would have been incurred during that period.
A strong USD is exactly what investors holding USD denominated assets want. For the moment, the trend is up for the $usd which means hold onto US assets.
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