UPDATE: German Bunds reversed earlier losses. Yields are now down 2bps to 0.257%.
Happy Thanksgiving eve. This is the day of the rope for Dollar bears, as demand for the greenback soars to new highs — sending shockwaves throughout credit markets. The euro is trading with a 105 handle against the dollar, off by 0.7%.
German bund yields are rising again, in addition to the rest of Europe.
U.S. 10yr is officially in blowout territory, rising from 1.75% to almost 2.40% since election night. Somehow investors have ignored the deleterious affects this rise in borrowing costs will have on the economy. Instead, the financial media has been fixated on an alleged inflation that is going to rip through the economy, like a miracle, thanks to Trump’s fiscal plans. The only problem with that train of thought is said plans will be wholly dependent on cheap credit, which is getting more expensive with every passing day.
Gold is down more than 2% — absolutely brutalized thanks to dollar strength.
Subsequently, gold stocks are off by more than 5%. It’s truly the day of the rope for them.
Tech stocks are resuming their post Trump win weakness.
Markets are somewhat benign to this whirlwind in the credit markets, led by the dollar. Eventually, this will mean something — especially when the Trump administration attempts to borrow a trillion dollars for new roads and tunnels.
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Expensive is relative. 30 yr Mortgage rates are still currently under 5%, and the 10yr note was as high as 3% at the end of 2013, and the world didn’t end.
Rate of change is what’s important here. Fiscal budgets will sink deeper into deficit.
all that rehypothecated paper gold getting printed up…time to buy more sale-priced gold…..
I agree with that. This will all end in disaster and when it does, everyone will want to own physical assets but none will be available at anything close to today’s prices.
my long-term dealer is not even answering emails….
There is a bullion exchange near my house that always seems to have a line out the door these days. My wife and I decided to buy and ounce a month a while back. Might be worth doubling up while prices are down.