Sept 11
Sept 11. Rates continue to slide with 2-year note below 89 bps. Tens ended at 3.34%, down 13bps on the day. The low on March 18 was 2.535, the high on June 10 was 3.95%. Halfway is 3.24% which appears to be the target.
–Though stocks continue to climb the interest rate environment doesn’t indicate robust economic growth. The US is probably falling into a Japanese style malaise. As a point of reference, the 5th quarterly euroyen contract was in a range of about 30 bps from 9960 to 9990 for more than three years from 2001 to 2004.
–Article on zerohedge.com notes strong correlation between the start of QE (on March 18) and the rise in the SP500. The article notes the Fed’s balance sheet has increased by $917B, while Total Deposit Reserves increased by $886B. In other words, bank reserves aren’t being lent out and thereby stoking inflation, rather, banks are buying securities.
–Significant upside breakouts in silver miners yesterday, Hecla and Couer D’Alene made new highs for the move.
–News today includes Consumer Sentiment expected 67 from 65.7, and the Treasury Budget for August, expected -140B. July was -180B, so it’s an improvement. From BBG: “…fiscal year-to-date red ink at a numbing $1.267 trillion, compared to a deficit of $388.6 billion this time last year.”
