OPEC Petro-dollars Recycled into US Bonds

by: Gary Dorsch

Higher US oil prices and higher US inflation have not led to higher US Treasury bond yields, partly because Arab members of the OPEC cartel recycled as much as $115 billion of Petro-dollars into the US bond market in 2005. Persian Gulf kingdoms bought US Treasuries through their London based brokers, on a bet the US dollar would rise against the Euro and British pound. However, with the dollar showing signs of topping out, Arab kingdoms could turn into sellers of US Treasuries in 2006.

OPEC Recycles Petro-dollars into US Bonds