Here is a little teaser for our coming post on the Treasury market, which should be out tomorrow.  The latest data is from the Flow of Funds just posted by the Federal Reserve Board (FRB).

Note,  less gold (Fed) and red (primarily foreign central banks) in financing the budget deficit.  These are flows into Treasury securities measured over each quarter and then annualized.

Less central bank purchase of Treasury securities, which are not price sensitive, spells trouble for the Treasury, and is bad, bad, bad for the emerging market capital flows.

The 10-year’s  recent move over 3 percent is just the beginning of a big move up in interest rates, in our opinion, which is based on a fairly rigorous factor analysis.

By the way,  we own this chart, contrary to what some big German bank does.

Stay tuned.