China Selling Bonds
Stocks fell back slightly today – really a sideways move. Bonds are starting to creep up in interest rates over the past week.
The Dollar gained a 1/2 cent, and gold and gasoline moved sideways. Oil, on the other hand, moved up again today, and is starting to look a little stronger.
In the news today…..
Greece – who will bail Greece out? All the bodies of the EU have backed away, and also forbid use of the IMF to bail out Greece. That leaves bilateral loans from the strongest European nations – probably Germany and France (although Italy has been tapped too). If anyone comes to Greece’s rescue, it will be the first rescue ever to occur since the Euro was created.
Goldman Sachs and Greece – were intertwined in a phony swap deal worth about $1B, that didn’t turn out well for Greece. Interesting how Goldman Sachs turns up around the charred remains of their investors.
Cap and Trade – is alive and well in Russia and China. Citibank is brokering cap and trade credits between the two countries right now. I view this as a very dangerous development, as the pressure for credits in the US will build and build. If the US joins, the big winner will be Goldman Sachs – so beware whenever you hear about cap and trade.
Retail sales – rose 1.4% week to week, and 1.8% year over year. This is hilarious. Think about those numbers. That means retail sales were flat for the entire year, and jumped up in one week. At the very least, the volatility of this statistic is very high.
Tonight’s Dinner conversation…..
China – that’s right China. A big topic. But, let’s talk about their ownership of America, and their natural rivalry and animosity with the US – in our selling weapons to Taiwan.
China has put out the word to SELL its non-US government bonds. Yes, China is selling bonds. Not the US Treasuries that it owns, but all the other stuff it owns. It has put out it orders to sell, and we should see the effect of this over the next couple of months.
They were triggered by Bernanke’s statement that he was going to stop buying mortgage securities. This will probably result in higher mortgage interest rates – and that in turn could lead to higher interest rates in general.
So, the Chinese are being very intelligent in their response. Don’t hold bonds when interest rates are going to go up. I completely agree with their financial decision.
Here are the last numbers for today:
Dow Jones 30 Industrial – 10,0538 (down 20)
10 Year Treasury Bond – 3.69% (up 0.06%)
Euro – $1.3729
Gold – $1076 (down $1)
Oil – $74.47 (up $0.72)
Gasoline – $1.93 (no change)
