Lee AdlerWhen Kevin Warsh came aboard as Fed chair, he let it be known that reducing the Fed’s footprint in the markets was one of his goals. No more QE market interventions. No more forward guidance. He would move forward by going backward, to the good old days, when young traders stood by the news ticker on Thursday afternoon waiting for the word from Dr. Doom, Henry Kaufman, and Dr. Death, Al Wojnilower, on how they read the Fed’s tea leaves, from changes in M1.
Could be rounded bottoms or spike heels
Intermediate cycle lows are set to form, but this morning’s weak pre market raises questions about the shape. Monday’s closing level should tell tales.
Treasury Just Sent Piles of Free Money to the Markets
Resistance is futile, or is it?
I have reversed the usual posting order this week, posting the lengthy and detailed Macroliquidity™ report on Monday instead of later in the week as…
The Treasury supply surge was trimmed this month, as the Treasury spent cash to pay down T-bills and double up buybacks. It did not help. Treasury prices cratered and yields surged. Significant chart levels have broken, and another breakout, through 5% on the 10 year appears imminent. The implied measured move target of that would be x.xx%.
The market is holding just under resistance, with the S&P 500 stalling at a multiple trend convergence zone and support suggested just below. Longer-cycle indicators show signs of a top, while the 6-month cycle remains uncertain. Short-term cycles are in a down phase, though a 4-week bounce is expected to begin from a low due xxxx xxxx xxxx. The Dow, VIX, and cycle screening data all have cautionary setups, although the market’s long-term uptrend channel remains intact.
The rest of the investment universe has caught up with us and is now deeply concerned about the bond market. Well known pundits have expounded on the problem, attributing it to all sorts of tangential and meaningless issues. Meanwhile the problem is exactly as we foresaw over the past couple of years, supply. Simply by watching the trends of the data that matters, I forecasted that the inflection point would come in July. That was a few weeks early, but close enough.
We are now in the belly of the beast. Get used to it. Continue to avoid the bond market in any form. And be wary of the potential for contagion.
This report updates the current actual real time government revenues and outlays through the end of August. A marginal improvement in the data changes nothing. The danger remains extreme.
The market is holding just under resistance, with the S&P 500 stalling at a multiple trend convergence zone and support suggested just below. Longer-cycle indicators show signs of a top, while the 6-month cycle remains uncertain. Short-term cycles are in a down phase, though a 4-week bounce is expected to begin from a low due xxxx xxxx xxxx. The Dow, VIX, and cycle screening data all have cautionary setups, although the market’s long-term uptrend channel remains intact.
The Treasury will at least double its debt buyback program, but the details that matter most, including how large the increase will actually be and how it will be financed are yet to come. The bigger question is whether it can meaningfully offset near-record coupon issuance. Will it have the intended effect, or adverse unintended consequences. Dealer positioning in this regard is of Primary importance. This week’s Primary Dealer Positions and Financing update looks at where dealer balance sheets, repo financing, and futures hedging stand as the pressure from the tsunami of issuance continues to build unabated.
The market is holding just under resistance, with the S&P 500 stalling at a multiple trend convergence zone and support suggested just below. Longer-cycle indicators show signs of a top, while the 6-month cycle remains uncertain. Short-term cycles are in a down phase, though a 4-week bounce is expected to begin from a low due xxxx xxxx xxxx. The Dow, VIX, and cycle screening data all have cautionary setups, although the market’s long-term uptrend channel remains intact.