Category Archives: Interest Rates

The S&P Levels You Need To Know

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

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

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

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

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

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

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Social Security In Deficit = More Public Treasury Borrowing

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

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

Tail Event Day: -3.29% S&P500 and +1.7 bps 10-year Yield

Something is rotten in the U.S. bond market, which is irritating the stock market, to say, the very least. Today’s 3.29 percent flop in the S&P500, coupled with a 1.7 bps rise in the 10-year yield, is very rare, and … Continue reading

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QOTD: Slouching Toward A Banana Republic

Could it be the markets are instead revolting against President Trump’s fiscal profligacy, and beginning to price in a potential debt crisis/major interest rate spike?   Just askin’. “I think the Fed is making a mistake. They are so tight. I … Continue reading

Posted in Equities, Fed, Interest Rates, Monetary Policy, Uncategorized | Tagged , | 3 Comments