We are all familiar with the quoted value of stock indexes like the DOW or S&P 500 that we see on websites and TV news channels. Even though these quotes are of course accurate they are also ‘currency nominal', meaning that they ‘hide' the affects of US Dollar currency fluctuations.
Recently the relationship between USD weakness and equity strength has been pronounced.
With American, British, German, Japanese and other ‘safe haven' sovereign bonds yielding 2% or less many fixed income investors are looking for an alternative to increase cash flow yield in their portfolios. Investors must be VERY careful however, in making sure they are supplementing cash flow without increasing risk.
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