U.S. Dollar Favorite Currency Investment of Hedge Fund Managers in Near Term; Few Fund Managers Expect Greek Sovereign Debt Crisis to Lead to Destruction of Euro

“The debt crisis in Greece, the creditworthiness of other countries in Europe, and the U.S. dollar rally have market participants focused on currencies,” said Vincent Deluard, Global Equity Strategist at TrimTabs. “We think currencies will dominate other investment themes throughout 2010.”

Nearly 26% of hedge fund managers expect a quick resolution to the Greek crisis, while 59% believe it will spread without endangering the unity of the Eurozone.  Only 15% of managers believe it will lead to the destruction of the euro.

“The euro is one of the few successes of the European Union in the past 10 years,” said Deluard.  “France and Germany will take action to protect it if this Greek tragedy infects other Eurozone members.”

Nearly all managers expect the yield on the 10-year Treasury note to remain level or rise significantly by year-end.  Only 7% expect long-term interest rates to drop.

“Managers worried about inflation expect long-term rates to pop,” Deluard explained.  “And governments on both sides of the pond are auctioning huge amounts of debt this year.  Beware a bloodbath in bonds.”

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