The "Treasury bears" like Jim Rogers and others who don't understand that the money to buy Treasuries comes from gov't spending itself, have been constantly calling for a top in the Treasury market. Just last week there was more of the same.
Do yourself a favor and take their money--it'll be easy pickin's--because the recent rise in gov't spending and securities purchases by the Fed have caused reserves in the banking system to shoot past the $1 trillion mark!
There is NO WAY bonds are putting in a top with this humongous new reserve addition.
3 comments:
HI MATT / MIKE
THE LAST TIME RESERVES SWELLED WAS LAST YEAR IN ANTICIPATION OF A BANKING HOLIDAY / CRASH ...
THIS IS ALL PART OF ELASTIC CURRENCY THEORY ...
IS THE FED WORRIED ? WHY ALL FUSS AND BOTHER WITH RAMPING UP RESERVES ?
TIME TO MAKE LOANS TO NEW ZEALAND AGAIN IN THE FACE OF FOREIGN BANK MELT DOWNS ?
Goog,
Last year they originally rose from near zero to $800B when the Fed went full USD allotment to the Foreign central banks and some domestic liquidity programs.
Mike is pointing out the current near term high (at the tip of the graph) in reserves, much of which is probably due to Fed actions of buying MBS. Some of the proceeds to the sellers from these purchase transactions will make their way into Treasuries. I hope! ;)
Mike,
Santelli is on CNBC right now reporting (in a surprised manner) that today's auction demand was off the hook!
He still doesnt get it!
Post a Comment