The 10-year yield retreated last month from a potentially crucial spot. The supply-demand dynamics are in favor of bond bears, but this is also a well-known fact, hence may already be in the price. They at the same time are … Continued
Easy money is here to stay. That was pretty much the message Chair Powell delivered this week. The US economy is up to the gills in leverage. A sustained rise in interest rates will hurt. The Fed will try to … Continued
US equities surged last week pricing in a divided government – a Democrat in the White House, Republicans in control of the Senate and Democrats of the House of Representatives. Major indices rallied right into important resistance. The focus now … Continued
June’s CPI was reported yesterday. Inflation behaves well. This makes the Fed’s job easier to continue to pour liquidity into the system. All hell breaks loose once inflation refuses to cooperate – whenever that is. After three successive months of … Continued
Following futures positions of non-commercials are as of June 16, 2020. 10-year note: Currently net short 10.9k, down 13.1k. Foreigners are aggressively getting out of the US sovereign bond market. In March and April, they sold $475.6 billion in Treasury … Continued
US reliance on debt is growing. Having already just about used up the conventional monetary tool and a massive balance sheet, the Fed is looking for new tools – a la Japan. Stocks’ reaction function to Japanification is key. At … Continued
Debt addiction is pervasive among consumers, corporations as well as the federal government. Several debt-related metrics are in uncharted territories. The craving is built into the system and can continue until markets rebel. In December, U.S. consumer credit grew 4.7 … Continued
Major US equity indices posted fresh new highs Monday. For a while now, foreigners have lent a helping hand, although they at the same time have been aggressively selling US Treasury securities. Equity bulls would prefer foreigners to maintain the … Continued
Following futures positions of non-commercials are as of November 19, 2019. 10-year note: Currently net short 183.5k, up 34.7k. Interesting dynamics are in play in the sovereign bond market. In the 12-months to October, US budget deficit crossed $1 trillion. … Continued
The 12-month total of US budget deficit just crossed $1 trillion. Treasury issuance is well over $900 billion. Foreigners at the same time have been reducing exposure to US notes and bonds. If the trend persists, this is bound to … Continued