Category Archives: Interest Rates

It’s Always About The Treasury Flows

Posted on December 17, 2019 by

We have looked at the central bank holdings — both the Fed and foreign central banks — of marketable Treasury bills, notes, and bonds over the past twenty years and were quite surprised by our findings.   Our analysis may also … Continue reading →

Posted in Bonds, China, Interest Rates, Japan, Uncategorized | Tagged , , , , | 1 Comment

Yield Spike

Posted on January 4, 2019 by

We highlighted the potential risk in our post yesterday, Druckenmiller On Bonds If you listened to the Druckenmiller interview we posted on New Year’s Day,  he thrives in bear markets, not by shorting stocks but being long bonds.  Shorting stocks … Continue reading →

Posted in Bonds, Interest Rates, Uncategorized | Tagged , , | 10 Comments

The S&P Levels You Need To Know

Posted on December 3, 2018 by

Interesting double-top, double bottom W forming in the S&P500.   In honor of George H.W. and George W.?  Hmmm…… The futures were rejected right at key resistance in overnight trading, making a high at 2814.0 during in early morning pre-trading and … Continue reading →

Posted in China, Equities, Interest Rates, Monetary Policy, Uncategorized | Tagged , , , , | 17 Comments

The Interest Rate Paradox In Emerging Markets

Posted on November 25, 2018 by

In advanced economies, interest rates fall during recessions as investors replace risky assets such as stocks with safe assets such as bonds and cash. This makes fiscal stimulus easier. Everywhere else, recessions create fears of debt default or debt monetization … Continue reading →

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Short Covering In Bond Pits And The S&P

Posted on November 19, 2018 by

Well, the virtual bond pits. Looks like specs are getting spooked and covering their bond shorts. Stunning, however,  that the 10-year note yield is right about where it was on September 21st when the S&P500 made its intraday all-time high … Continue reading →

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Mr. Market’s Biggest Headwind

Posted on November 12, 2018 by

At the end of September, we posted our analysis of the structural changes taking place in the Treasury market,  The Gathering Storm In The Treasury Market 2.0,  which was very well received and still getting thousands of hits per week. Crowding Out Our … Continue reading →

Posted in Budget Deficit, Capital Flows, Interest Rates, Uncategorized | Tagged , , , | 20 Comments

Why The 2018 Stock Market Corrections Are Different

Posted on October 29, 2018 by

Just a quick note and some data to bolster our last post and concern that Treasury yields are not coming in  during this stock market correction. The table illustrates that the this year’s two S&P 10 percent corrections have coincided … Continue reading →

Posted in Equity, Interest Rates, Uncategorized | Tagged , | 33 Comments

China and Japan Continue To Reduce Treasury Holdings

Posted on October 16, 2018 by

The U.S. Treasury just released the August TIC (Treasury International Capital) data at the market close. The key takeaways: China and Japan, the U.S. government’s two largest foreign creditors, continue to reduce their Treasury holdings, both down $6 billion in … Continue reading →

Posted in Interest Rates, Uncategorized | Tagged , | 1 Comment

Social Security In Deficit = More Public Treasury Borrowing

Posted on October 16, 2018 by

Summary Largely ignored by the markets,  Social Security moved into structural deficit this year Social Security has been running primary deficits since the GFC; that is financing itself by the interest earned on Treasury securities The government will no longer … Continue reading →

Posted in Fiscal Policy, Interest Rates, Uncategorized | Tagged , , , | 3 Comments

FOMC: Hardly Tight, Hardly Loco

Posted on October 15, 2018 by

The data speaks for itself. Real Effective Fed Funds Rate (REFFR) The real effective Fed Funds rate (REFFR), the Federal Reserve’s target rate of overnight commercial bank reserves lending rate less the CPI year-on-year change,  remains negative for the 36th … Continue reading →

Posted in Fed, Interest Rates, Monetary Policy, Uncategorized | Tagged , , | 8 Comments