Sept 12. Foreign policy issues looming larger?
–Financial Times: “German Court backs ESM bailout fund”. Barroso proposed a stronger european banking union giving the ECB more banking oversight. (Worked for the Fed, right?)
–Gold and silver are making new highs this morning with GCZ near 1750. Treasury yields are edging higher with tens now 1.75 vs 1.69 late yesterday. 10 yr note auction today. The euro is rallying, now over 129.
–1) US embassies in Egypt and Libya were mobbed yesterday, apparently the violence was much worse in Libya where at least one was killed. 2) The US, while not taking sides, urged China and Japan to resolve growing tensions over the Senkaku islands as China sent two patrol ships to the scene. 3) Obama won’t meet with Netanyahu when he’s here. The White House calls it a scheduling conflict, while the press calls it a snub. Three disparate foreign policy events which may appear minor, but could mushroom. It would be ironic if foreign policy became a bigger issue in the upcoming US election than the economy. A move by Israel against Iran is growing more likely…
–Three year auction saw record bid cover and a 33 bp yield. Tens and bonds might face a less welcome reception even though tomorrow’s FOMC announcement is widely expected to contain more cowbell.
