Courtesy of Pam Martens
10-Year U.S. Treasury Note Yield (Bright Green) on October 3 Through Early Morning October 4, 2018 Versus Stock Prices in Prudential Financial (PRU), AIG, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Citigroup and Dow Jones Industrial Average on October 3.
By Pam Martens and Russ Martens
Yesterday’s Treasury market was a mess. So was the front page of the New York Times, which featured a montage of tax records evidencing tax scams by the Trump family. We think there’s a connection.
The New York Times’ 14,000 word expose and exhibits effectively render Trump a lame-duck president. That means that the country is left with the unprecedented national debt created under his big tax cuts for corporations and the wealthy along with a billionaire Emperor devoid of either clothes or the aura of a self-man man. The outlook for mounting U.S. debt pushing up Treasury yields comes at the same time that the Federal Reserve is scaling back its crisis-era purchases of Treasuries and as the European Central Bank begins this month to halve its bond purchases.
The Federal Reserve, using a previously released schedule, began on October 1 to remove an additional $10 billion in bond liquidity from the market (by reducing its rollovers of maturing Treasury debt on its balance sheet from $40 billion to $50 billion). The European Central Bank has added to that loss of liquidity this month by cutting its bond purchases (Quantitative Easing) from about $35 billion to $17.5 billion.
Yields on 10-year and 30-year U.S. Treasury notes spiked bizarrely higher yesterday and this morning. The 10-year U.S. Treasury note opened yesterday with a yield of 3.0644 percent and then proceeded to spike more than 12 basis points to close at 3.1873 percent, the high of the day and the highest level since 2011. The unusual spike in the 10-year continued into this morning, with the yield reaching 3.229 percent in early morning trade.
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