The magnificent market meltup marched on. The target could be the uptrend line forming the upper line of a broadening pattern at 2040, or it could be the 6-7 and 8 week cycle projections or the 13 week cycle projection that is even higher. Here’s what the data suggests now.
Treasuries have paused in their 2 week uptrend and the Dollar has broken through another resistance level as it takes aim on higher levels.
Of course, markets top out when everything looks magnificent and they couldn’t look much brighter than they do right now. Here are the details on real time US Federal government cash flows this week, and what they mean for the markets, along with a brief on Japan giving US a BoJob.
The markets have held up remarkably well while facing a big Treasury settlement on Friday that will suck cash out of the accounts of dealers.
This report looks at flows on the liability side of the balance sheet of the Fed and the assets of Primary Dealers, along with secondary banking and financial indicators that can, at times give us clues about the future. Of note this week is the fact that the Fed has restarted its Term Deposit Facility…
The macroliquidity indicator continues to flatten as the Fed stays the course of reducing outright securities purchases. Several other macro liquidity component indicators are on the cusp of breaking the long term uptrends in force since 2009 or 2010. Their weakening in September accurately foreshadowed the stock market correction.
Treasuries and the Dollar rebounded from the previous week’s selling. Both were due to consolidate. The major trend is still up in the dollar, but may be in the process of reversing in the Treasuries.
The Federal Government’s withholding tax collections have rebounded over the past week. This continues the usual pattern of quarterly fluctuations. The annual growth rate this week was around 4.7% in nominal terms and probably 2.2-2.7% in real terms. This report illustrates the trends, and covers the particulars and the implications for Treasury supply and the…
The Treasury Borrowing Advisory Committee (TBAC) is a committee of Primary Dealers that advises the Treasury on its financing needs. Its quarterly forecasts are a major tool in our analytical arsenal. Its current quarterly report forecasts large T-bill paydowns in early November and again in early December.
Primary Dealers are getting longer Treasury coupons and futures and banks are sharply increasing their funding of the Treasury carry trade. Will this be problematic for the markets?