Bond Market Blues

By MICHAEL GRAY

The Chicago bond market is possible the only bourse telling the truth about the hyper-inflationary future, caused by the Obama administration’s plan never to let a crisis pass without overhauling government.

Yields on US Treasuries are soaring in the longer maturities as Uncle Sam floods the market with debt to fund Washington’s agenda.

Treasury Secretary Tim Geithner and Fed chief Ben Bernanke whistle the deflation tune in hopes of evading the inflation bubble. Both men are planning to sell $3.26 trillion in debt by October of this year. So their tune doesn’t ring true.

This team is walking the tight rope between issuing debt to fund what the Democrats want to enact and keeping interest rates low enough to have mortgage rates conducive to bailing out the housing market.

The dollar is being supported by Asian markets –– mostly China –– if you look at trading on the Dollar Index during the Asian trading day. China needs a stronger dollar to support its current debt holdings as well as propping up its slumping export trading.

Gold prices have moved much higher on dollar weakness, along with crude prices. Both should move much higher over the summer despite market manipulation. The dollar will trend down for the foreseeable future, which should be bullish for these commodities.

The Mortgage Bankers Association’s home delinquencies and foreclosures rose to record highs in the first quarter of this year. The most surprising –– but predicable if you read this blog –– prime loans passed subprime loans in delinquencies for the first time.

Unemployment claims decreased last week 13,000 and the pundits are looking at that as a fig leaf. But if you look at the data, every week preceding a holiday shows a pullback. I would venture to guess this number will improve again next week because of Memorial Day and then fall in two weeks.

Today’s housing and employment numbers show the economic trends have not flattened out, yet the market shrugged off the jobs number in pre-market and then turned down on the housing news, which came out during trading. Hmmm.

Plunge Protection Team

If you look at stock market futures over the last two weeks a puzzling question arises.

We have positive futures on most mornings; even when overseas markets are down reacting to our previous session. Rumors in the marketplace have the President’s Working Group –– the Plunge Protection Team –– in the futures market through market participants read: Goldman, Morgan, JP Morgan, trading up stocks to buoy the market.

For more on Wall and Washington and the economy see: https://mgray12.wordpress.com

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