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If you’re wondering why China is taking their time picking up the phone.
@bloomberg.com @financialtimes.com @barrons.com
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That's it & that's all.
If you’re wondering why China is taking their time picking up the phone.
@bloomberg.com @financialtimes.com @barrons.com
I AM GOING TO CREATE DRUG SHORTAGES AND MUCH HIGHER PRICES
China will now pay a big number to our treasury. This is all taxes. And don't let them keep telling you that this is a tax on our people. I hate that. You know, they say it's a tax. No.
so... equities are down, but treasury yields are up
something isnt right
this er is breaking the economy
"whatever it takes"
https://adamtooze.substack.com/p/cha...we-on-the-edgeBut, if you are worrying about something more immediate i.e. a financial crisis spinning out of control this week, then the market to focus on is not the stock market, but the market for bonds (aka fixed income) and ultimately this means the giant Treasury market with $28 trillion outstanding.
The truly systemic bond market is the US Treasury market, all $28 trillion of it. In the current moment it is vital because it simultaneously serves three functions: as a safe haven, a political target and a piggy-bank.
Treasuries are a general-purpose safe haven. Investors who are selling their shares, driving stock market prices down, have to park their cash somewhere. The obvious place are US Treasuries. In the “normal” course of a stock market correction, we would expect to see bond prices going up as stock prices go down, as investors shuffle from one to the other. As bond prices go up, the yield (the effective interest rate) goes down. This tends to lower interest rates and ease pressure on businesses. This is the see-sawing, balancing effect of markets operating across assets. Again, it is painful, but it is good news. People take losses. But it suggests that the financial system is still working. As Katie Martin commented in the FT in the last few hours, this is the one to watch.
As the Wall Street Journal commented 10 minutes ago (I kid you not), the market is hard to read right now because longer term bond yields have to price in inflation, and Trump’s tariffs are clearly terrible for inflation. So right now we have safe-haven demand driving Treasury prices up (causing yields to come down) and inflation fear driving Treasury demand down (causing yields to go up). All of us are trying to read through the fog.
The old man hit 'em again just after midnight.
https://www.msn.com/en-us/money/econ...de/ar-AA1CwKdMThe basis trade involves betting on the price difference between Treasury securities and their corresponding Treasury futures contracts. Hedge funds often use significant leverage, sometimes up to 100 times, to profit from the convergence of these prices as futures contracts approach expiration. With around $800Binvested in the basis trade, it cons utes a large portion of the $2T, the asset manager said.
Experts worry that the trade poses risks, especially in the event of a market shock. Highly leveraged hedge fund positions in Treasury securities could be rapidly unwound, creating instability. Such unwinding would place immense pressure on broker-dealers, potentially disrupting liquidity in Treasury markets and repo funding.
And they hit back
Maga es
Nobody is negotiating
(Except the Japanese because their economy has been on life support since the 90s)
LMFAO
selling off to hide cash under the floorboards?
https://www.msn.com/en-us/money/mark...ng/ar-AA1CzVneThere are other alternatives as well. When the U.K. bond market tumbled after a negative reaction to Liz Truss’s mini-budget in 2022, the Bank of England intervened with a temporary purchase of longer-dated government debt — precisely the segment of the U.S. bond market under threat.
It was an intervention that was successful — stemming the bond-market turmoil that had seen 30-year gilt yields surge 130 basis points in just three days, even making a profit of £3.5 billion on the £19.3 billion of purchases it made, and then unwound.
TS Lombard strategist Dario Perkins pointed out that after the intervention, the Bank of England resumed hiking interest rates, lifting them by another 300 basis points as it fought surging inflation. It even resumed its quan ative-tightening plan of reducing the bonds on its balance sheet.
“You can intervene briefly in bonds and stay hawkish on inflation,” says Perkins.
The Fed could be even more technical, focusing on the overnight borrowing market and what’s called the Secured Overnight Financing Rate.
There, the swap rate between SOFR and the equivalent maturity Treasury are tumbling — which suggests liquidity is vanishing and that banks aren’t lending to each other.
https://www.bloomberg.com/news/artic...d-rout-goes-on“... The market has lost faith in US assets...
“... If recent disruption in the US Treasury market continues we see no other option for the Fed but to step in with emergency purchases of US Treasuries to stabilize the bond market.”
Economist Peter Schiff: “The crash that's now happening in the bond market has more dire implications than…the stock market. If these tariffs remain in place, the US could have a full-blown financial crisis by the fall that makes the 2008 Financial Crisis look like a Sunday school picnic.”
AEP in the Tory Telegraph
If you think it’s alarming now, just wait for Trump to wreck the bond market
The White House’s push for expanded presidential power threatens US economic stabilityhttps://www.telegraph.co.uk/business...s-bond-market/Donald Trump is systematically purging every US government ins ution, a pattern familiar to anybody who has studied the caudillo regimes of Latin America, or the playbook of today’s Putin-Orbán-Erdoğan prototypes...
Barron's
https://www.barrons.com/articles/dol...trump-7f2b5676Volatile moves in the dollar and bonds are sending a recession warning and also a signal that global investors are losing confidence in U.S. policy.
Invest in gold
This is the equivalent of a fighter getting his ass kicked in a boxing match, down 9 rounds on official score cards, both eyes closed, broken nose, bloody lip and his corner telling him he's winning every round.
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