What's Driving Rates?

While the bump in rates has been fastened to the recent election of Donald Trump, due to hopes of a deficit expansion program (read: more debt) and infrastructure spending which should foster economic growth and inflation, it doesn’t explain the global selling of U.S. Treasuries.

Fed Fallout Escalates: China Bond Market Crashes Most On Record, Yuan Plunges

After a bubblicious surge higher over the last few months (as China's hot money swishes from one trending-higher market to another), China's bond market is collapsing just as we warned. As Chinese money-markets tighten into new year, yuan weakens, and capital outflows accelerate, so it appears the final bastion of safety has cracked. Chinese bond futures crashed overnight by the most on record, erasing in a week the gains of the last 18 months.

With All Eyes On The Fed, Stocks And Crude Slip, Bonds Rise

European stocks slipped from an 11 month high, Asian stocks and S&P futures were flat as caution pervades global markets before the Federal Reserve’s expected interest-rate hike on Wednesday. Treasuries slipped, after reaching the highest level in more than two years. Oil in New York slid to near $52 a barrel after API showed a build in inventories, and currencies of commodity-exporting nations fell. Gold headed for its biggest gain in a week.

Hugh Hendry: "We Are Running A Trumpian Portfolio"

  • In Europe we anticipate further duress in the political commitment to the European project as the success of Trump’s economic stimulus plan keeps US growth humming
  • The combination of Trumpian economics and Japanese 10-year nominal yields being trapped at zero by the Bank of Japan should mean the yen continues to weaken.
  • And finally, there are Chinese trades which generate positive carry should the status quo persist yet remain long volatility should pressure on the renminbi intensify

Only One Step Away From A Global Trade War

Isolated trade-war hot spots that are starting to smolder in different parts of the world could quickly converge into a single major, global, trade-war conflagration.

Indian Gold Premiums Explode After Nation's Biggest Gold Importer Suspends Bullion Dealers Accounts

Following news last week of a surge in Chinese retail gold premiums as demand for physical bullion soars amid China capital controls, Reuters reports that the chaos in India has sent people rushing to buy gold, paying as much as a 50 percent premium above official India prices. This renewed surge in demand for physical in india follows reports that India's top importer of gold, Axis Bank, reportedly suspending the bank accounts of some bullion dealers and jewelers following the arrest of some executives over money laundering.

Frontrunning: December 12

  • Crude Soars as Output Deal Weighs on Bonds; China Shares Tumble (BBG)
  • 10-Year Treasury Yield Above 2.5% for First Time in Two Years (WSJ)
  • The New Reality of TV: All Trump, All the Time (NYT)
  • Fed May Struggle to Signal What Comes After December (WSJ)
  • China warns Trump against ignoring its Taiwan interests (Reuters)