Can The US Government Salvage the US Economy?
US Government is still trying to salvage the US economy and dissipate volatility in the stock, bonds and futures markets . The $80+bln bail out of AIG was just the start with them now implementing new rules with the SEC that prohibit naked short selling in the stock market. In the forex market spreads are uncharacteristically wide with most brokers and the rollover spreads are extremely wide. This is due to LIBOR (London Interbank Rates) being the widest it has been in 9 years.
Beyond the forex rolls and US Governments attempt to quelch volatility, we look at US Treasury Bills. The yield on the 3 month T-Bill have dropped to the lowest rate in over 50 years indicating a risk aversion. In times of risk aversion, which is what we appear to currently have, lower yielding currencies, currencies with a lower interest rate, often appreciate the most. At this time, we should look to the Japanese Yen to rally.