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Posted in 1 - Liquidity Trader, US Treasury Market and Tax Revenue Trends

Long Live the Dead Cat Bounce – It’s Dead

The Monthly Treasury Statement for May confirms that the economy rebounded during the month, but more recent data through last week suggests that the rebound has already expired. Signs of renewed weakness come when the numbers are still far from a full recovery. The economy is beginning to weaken again, starting from weakness.

That’s relevant because it means that the Federal government will need to continue to issue massive amounts of debt. It may not be quite as much as in March and April, but it will still be at least double past peak levels.

We also know that the Fed has sharply cut the amount of that debt that it is directly absorbing or financing.

Here’s what this means for your investing strategy.

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