Bond Supplies
Stocks fell slightly today.
Bonds had plenty of action with interest rates shooting upward – see article below.
The Dollar strengthened as oil is thinking that the US economy will be coming back fast – kind of illogical, but that’s the market.
Gold lost some of its luster, falling $22.
Oil and gasoline powered ahead as the Russia/Ukraine gas situation, and Israeli/Gaza incursion is causing oil to command higher prices. Gasoline is now at a level where pump prices should start to go UP!!!!!! This is bad news for all the optimists in America who were enjoying the cheep gasoline. Let’s hope oil prices fall soon.
In the news today….
Bonds were acting quite normally, and I want to take this opportunity to show you one way that interest rates can go UP. This is happening right now. Why?? There is a big supply of bonds coming on the market right now. Why??? Because the US Government has been spending so much money (and doesn’t have the money) that it must finance its spending by writing bonds, and selling them to whoever will purchase them. The supply is truly astounding with new terms (like 3 year bonds) and rumors of 40 year bonds. This level of supply is spooking bond traders, and interest rates are rising accordingly.
Consider the idea of a 40 year bond. Why would the US Government want to sell 40 year bonds? Simple in my mind. Interest rates are at historic lows. If they can get someone to buy these bonds – knowing fully that interest rates will be rising in the future – they will sell them at low interest rates now, and be able to pay those low interest rates for the next 40 years. A neat trick if there are buyers – and there are buyers.
International Trouble???
The Italian Government is (rumored) to be considering suing JP Morgan, Deutsche Bank and UBS for $47.5B of bad swaps they sold the Italians in the 90’s. When things get bad, the people who lost their money go hunting for the guilty. This unraveling of the financial problems will continue, and will continue to have downward pressure on the financial institutions and banks. The size of this particular problem got my attention.
Here are Today’s numbers:
Dow Jones 30 Industrial – 8953 (down 82 points)
10 Year Treasury Bond – 2.49% (up 0.07%)
Euro – $1.3617
Gold – $858 (down $22)
Oil – $48.81 (up $2.47)
Gasoline – $1.18 (up $0.07)
