Saturday, September 17, 2016

SUNDAY 9/18/16; German Elections

The New York City bombing is a major focus of Americans as they wake on Sunday morning. Authorities are determining what links, if any, exist between the 

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Global 10-year yields are; Brazil 12.23%, India 6.87%, Mexico 6.03%, Portugal 3.39%, New Zealand 2.54%, Australia 2.10%, Singapore 1.84%, US 1.69%, South Korea 1.57%, Italy 1.34%, Canada 1.19%, Spain 1.07%, Hong Kong 0.92%, UK 0.87%, France 0.30%, Netherlands 0.11%, Germany 0.00%, Japan -0.05%, Switzerland -0.45%.

The German 10-year yield moves up and out of negative territory this week. The US-German 10-year yield spread is 169 bips. The rise in the Portugal yields is a canary in the sick global economic coal mine. The Portugal 10-year yield was sub 3% a couple weeks ago. The German-Portugal 10-year yield spread is 339 basis points and widening. As the US Apollo 13 astronauts said in 1970 on their trip to the moon, “Houston, we have a problem.” The sick banks in the peripheral nations of Italy, Spain and Portugal, and especially Germany’s Deutsche Bank, may bring the entire global economy and markets to their knees. Pay attention to the Portugal 10-year yield.

Euro 1.1155. Dollar/yen 102.28. Pound 1.3001. US dollar index 96.02. WTIC oil 43.19. Brent oil 45.77. Natural gas 2.96. Gold 1313. Silver 18.84. Copper 2.16.

US Treasury yields will begin the new week of trading at; 2-year 0.76%, 5-year 1.20%, 10-year 1.69%, 30-year 2.45%. The 2-10 spread is 93 basis points up from the 70’s one month ago reflecting a steeper yield curve. The 5-30 spread is 125 bips.

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