He told Bloomberg in a phone interview: “Convergence of central-bank policies is the biggest risk in terms of foreign buyers withdrawing from U.S. credit. Convergence could occur if the Fed adopts dovish policies to counteract a U.S recession, or conversely if growth picks up in Europe and Japan, leading central banks there to adopt more Fed-like hawkish policies. We believe the risks are asymmetric because in the former situation, dollar yields would be falling and counteract some of the FX losses from dollar weakness. Whereas in the latter scenario, yields would rise alongside a fall in the dollar, therefore amplifying potential losses for foreign investors.”
This article was provided by Bloomberg.