Need more evidence for a speedy end to this head-fake equity rally? Look no further:
A drop in foreign demand for Treasuries means those interest rates will have to rise to entice those buyers back. Higher rates in the commercial paper market will take us right back to the liquidity crunch of Sept. 2008, which will lead to more stories like this one:
The New York Fed data gives us a preview of what we'll see nationwide in a few months.
Nota bene: Anthony J. Alfidi is short uncovered calls on SPY.
Foreign demand for long-term U.S. financial assets fell in April as both China and Japan trimmed their holdings of Treasury securities.
(snip)
With the government's borrowing needs soaring, there have been some concerns that foreign interest in holding U.S. debt might falter, causing interest rates to rise.
A drop in foreign demand for Treasuries means those interest rates will have to rise to entice those buyers back. Higher rates in the commercial paper market will take us right back to the liquidity crunch of Sept. 2008, which will lead to more stories like this one:
Manufacturing in the New York region this month contracted at a faster pace as sales and inventories declined, showing the economy is still months away from a sustained recovery.
The Federal Reserve Bank of New York’s June general economic index fell to minus 9.4, less than forecast, from minus 4.6 the prior month, the bank said today. Readings below zero for the Empire State index signal manufacturing is shrinking.
The New York Fed data gives us a preview of what we'll see nationwide in a few months.
Nota bene: Anthony J. Alfidi is short uncovered calls on SPY.
