Well… I’ve spent a lot of time this week talking about the rise in Treasury yields… Apparently the rise in yields wasn’t confined to Treasuries, as municipal bonds are getting whacked too… I saw that my friend and former colleague, David Galland, had this to say about the problems with the municipal bonds…
[Read more...]A Gold Buyer’s View of the Lopsided Risk-Reward Ratio
December 1, 2010 by Leave a Comment
What a beautiful city! We’re talking about London. It was all dressed up for Christmas last night. And we got to see quite a bit of it. Student protestors blocked the streets around Trafalgar Square…and there was so much snow and ice…taxis must have stayed home. We walked from Mayfair to Southwark, using one of the pedestrian bridges to get over the river.
[Read more...]Dollar Strong vs. Euro…Weak Against Commodity Currencies
November 11, 2010 by Leave a Comment
The dollar is still moving along with strength for the fourth consecutive day… Yesterday, I told you that the 10-year Treasury had jumped 20 Basis Points to 2.72%, but not to get to lathered up about it, as the FOMC is getting ready to buy $600 billion of Treasuries, which should lower the yield. Well… The more I looked at the rising Treasury yields, (the 30-year hit a 6-month high) the more I realized that the dollar strength was being fueled by more than the problems of the Eurozone periphery countries… Investors were drawn to these higher yields, it’s that simple…
[Read more...]Currency Rally is Wiped Out!
October 29, 2010 by Leave a Comment
Last night, I went to my computer at home, and brought up the currency markets, and saw that as of 9:00 last night, the currency rally that was VERY strong yesterday, was still “onâ€�… But, like I said at the top, I arrived here, albeit late, this morning and things are drastically changed! I was all prepared to tell you about the 1.70 appreciation of the euro (EUR) in one day, and the $18 rise in gold… But, the best laid plans of mice and men change, eh?
[Read more...]Bonds, Gold and the Dollar: What They All Portend
October 25, 2010 by Leave a Comment
There are many difficulties associated with being lazy and inattentive like me, such as superficially interpreting the title “Gold Vs Treasuries – Which Do You Believe?� which is an essay by Michael Pento, Senior Economist of Euro Pacific Capital.
This is initially perplexing to me because neither gold nor Treasury debt obligations have voices with which to speak any truths or lies, which means it is some kind of metaphor that I don’t immediately understand. I was going to make a big stink out of Mr. Pento’s insensitivity to us dimwits out here who are, as we say, “ain’t so bright.�
[Read more...]Commodity Currencies Punch a Hole in Risk Aversion Fog
September 9, 2010 by Leave a Comment
Well… I love it when a plan comes together! I told you months ago, that the markets had given up on a rate hike from the Bank of Canada (BOC) at their 9/8 meeting… I took a different road, and said they would still hike rates… I was alone on this one folks, but… Guess what? The BOC hiked rates 25 BPS (1/4%) yesterday! I had thought they BOC would hike rates but attempt to water the hike down with dovish tones… Here’s the BOC statement, you decide if they sound dovish or not…
[Read more...]Existing Home Sales Plunge!
August 25, 2010 by Leave a Comment
An awful Existing Home Sales report yesterday is causing more people to jump on my bandwagon… You know, the one about the double dip recession, which will be fueled by another housing slump… Of course I call it a double dip, but in reality, I truly believe it to be a “single scoop,â€� for I don’t believe like our government officials, and Fed Heads that we “came out of the recession.â€�… But that’s just me, thinking logically, as always!
[Read more...]China Reduces Treasury Holdings
August 17, 2010 by Leave a Comment
Front and center today, the TIC flows data from June was very interesting yesterday… Before we get into this, let me explain what I’m talking about for the new “kidsâ€� in class… TIC stands for Treasury International Capital, and it’s just a fancy way of saying that someone is tracking the net security purchases… Why is this important? Well, security purchases by foreigners is how the US finances its ever growing deficit. For example, the trade deficit and foreign direct investment makes up the current account… But just to keep this simple, the trade deficit in June was $49.9 billion… The net security purchases to finance that deficit in June was… $44.4 billion…
[Read more...]Japanese Yen Hits a 15-Year High Versus the US Dollar
August 12, 2010 by Leave a Comment
I told you yesterday that the FOMC had set off some fireworks with their statements the other day, and those fireworks turned into a major sell-off in the risk assets yesterday… Stocks, currencies and commodities, all sold in a major way!
Stocks were down 2.5%, the euro (EUR) was down three whole cents, and gold lost ground… I would think that the 3-cent sell-off was a bit overdone… We’ll have to wait-n-see… But there was good news for Japanese yen (JPY) holders… The yen hit a 15-year high yesterday, when it traded, albeit briefly, below 85… I was a foreign bond and currency trader at the old Mark Twain Bank in 1995, and I truly recall when yen was 85 in 1995… I have to say that, in some ways, those days are very reminiscent of today… Like investors flocking to yen when yields are non-existent and the country is wallowing in deflation and a rising national debt…
[Read more...]
2-Year High for Oil Pushes the Loonie Higher
Well… As I expected, the euro (EUR) really ran up on Friday’s trading, as shorts were covered and trading books were squared for year-end. I truly believe that this euro-buying could be reversed as we go through the first month of 2011… The reason I say that is I truly believe that the euro will come under pressure, as the Eurozone gets probed to come up with better solutions to their periphery countries’ problems. I expect Germany to balk at many things, and when they balk, the runners get to move up…the runners being the dollar, and gold…
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