Inspiration

What we see today:

• 10-year yield sliding... Touches one-year low at 3.45%.
• Spot price of natural gas breaks psychologically important $3 level... natural gas ETFs hit new low.
• Sears plummets 12%... Largest U.S. department store chain buckles under pension, store-closing costs.
• S&P 500 basically unchanged in August.

Friends, Buy natural gas.
Now.
While we're off to the pub for a pint of Guinness and some good songs. We deserve it. Enjoy your weekend. Sphere: Related Content

Real -i- ty

The Hong Kong research house par excellence Gavekal is attributing the rise in yields as the key factor of the weakness of the S&P500 yesterday.
Rising rates are a sign that markets are normalizing after the sell-off of hedge funds last year and the subsequent fall out.
But if fixed income investors are wrong over the coming months and the economy is not recovering with inflation remaining absent, bonds could rally again.
For the moment the only inflation we note, are the prices of soccer players. These are not for Real, it seems. I am always curious which bank is giving here the line of credit.

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Bond yields

Long term interest rates are going higher. Not only in the States where a 30-year Treasury auction is waiting for buyers, but also elsewhere central banks have no control over their long term stuff.
However, this is a critical point in order to manage all the billions of money which is pumped in the financial system.
10 year GILTS went today over the 4%.

Yesterday the US auctioned 10-years Treasury which also went over the 4% in order to lure investors. This offering was one of the many and aimed to raise 65 bln USD this week.
Investors have become increasingly worried that an economic revival could be stalled if this trend continues.
That’s what we call the perfect excuse.
Unfortunately we cannot use it if we slip in from the pub after midnight. The lady of the house never believes us.

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Mortgage rates in the US are going higher. They are up to 5.20% from 4.70%. Will this hurt the refinancings? Or even more: the entire home industry?
Difficult to say.
Only thing: all rates are climbing.
Why didn’t Bernanke address this last week during the FOMC meeting?
Or is het confident that rates will come down again?
The 10-year US benchmark yield rose Friday to its highest point of 2009.

Is this a sign that inflation is already coming?
Is this the V-shaped recovery?

Or just sector rotation
Elsewhere we see the DBA has taken off since the last FED meeting. This ETF is wheat, soybeans, corn and sugar.

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