Moody’s turns negative on US credit-rating outlook
Bank of Canada, like the ECB, openly notes that fiscal spending is making it difficult to get inflation back to target. [Joseph Wang on X]
When speaking to the New York Economics Club last week, Jerome Powell, the Chair of the Federal Reserve, did not mince words about the U.S. government’s fiscal situation.
The overall level of the U.S.’s debt isn’t a problem in itself, the Federal Reserve’s Jerome Powell said Thursday. But when asked about the level of government borrowing relative to the past, the chairman suggested that rapidly rising debt levels could become a problem moving forward.
“The path we’re on is unsustainable, and we’ll have to get off that path sooner rather than later,” Powell said.
With an imminent US Govt shut down, a ballooning budget deficit and FED caught between a rock and a hard place, what we didn't need was ......
Ransomware attack on ICBC disrupts trades in US Treasury market[FT]
World’s Biggest Bank Forced to Trade Via USB Stick After Hack [Bloomberg]
With a tail of 5.3bp and dealers saddled with 24.7% of the issue, today's 30yr UST auction was nothing short of abysmal.
This type of volatility is problematic for the functioning of a broad range of markets, resource allocation throughout the economy , and the standing of the US in global finance. Mohamed El-Erian[Wikipedia]
FED Adds $1Trillion
Stock markets rallied crazily since Powell's post monetary policy meeting speech, creating over one trillion dollars of new value just from FAANG stocks. The inflationary expectations caused him to not only walk back the comments, reverting to the "will increase rates if necessary" mantra, but also losing the plot and swearing in a hot mic episode.
Markets spooked by a tougher-talking Fed boss [AFR]
Tempers are fraying
US Gov't Securities Liquidity Index, worse than COVID
The Federal Reserve owns 18% of US treasuries.
Markets were glad to take a breather with very few economic releases for the week and no central bank meetings.
Powell won't like the University of Michigan's forward inflation expectation survey. The significant increases tell a story of a public now with entrenched higher inflation expectations. Surely his rhetoric over the last year of "higher for longer" is a big driver in this !!
China Deflation Again
Bitcoin On A Tear
The potential US ETF approval, nearness of the halving and a rush of investors looking to diversify into a new type of hard money, means the price of BTC has more than doubled this year.
If you think of Bitcoin as the opposite of everything fiat, it will give you a better idea of it's value than focusing on what Bitcoin is. In a world of fiat currencies, it's the only way of measuring the disintegration of a monetary system.
Reverse repo below 1TUS$
Bank of Canada: era of very low rates is likely over, people and firms must adjust [Reuters]
BOJ debated groundwork for future easy-policy exit at Oct meeting [Reuters]
SoftBank posts unexpected $6.2bn loss after WeWork bankruptcy [FT]
German CPI has flattened out, but at a way too high level.
UK GDP surprised to the upside. No recession yet.
Australia records biggest income decline in the developed world [AFR]
Ports shut down over ‘cybersecurity incident’ [AFR]
Down under, a new focus has arrived. Australian States are being urged by public commentators in reign in infrastructure spending as it's perceived to be inflationary.