Author: BlackMask Financial

President Joe Biden said during an address on July 8, 2021, that the United States achieved its goal of fighting back the Taliban, capturing Osama Bin Laden, and ensuring radical terrorists in Afghanistan are not a threat, but the U.S. is not there to nation build and that must be left to the people of Afghanistan to decide. Nick Note: In what planet is this a victory. Reminds me of Viet Nam… declare victory and get the fuck out leaving a big mess behind.

https://youtu.be/2PdS_uFlv3U

LONDON (Reuters) – An economy powering back from the COVID-19 shock and resurgent inflation is yesterday’s story if the sharp rally in the world’s biggest bond markets in the last 24 hours is anything to go by. Prices on U.S. 10-year Treasuries have shot up, pushing yields down 8 basis points on Tuesday in their second biggest daily drop of 2021. The rally accelerated on Wednesday, with yields falling to just below 1.3%, their lowest in over four months. British gilt yields fell to a similar low while German Bund yields — which looked set to push above 0% in May — have dropped to -0.3%. Various explanations have been proffered: a squeeze on investors who had bet on yields rising, softer-than-expected economic data and concern about COVID variants. Push past the noise and the real message from sovereign bond markets — watched closely by policymakers and investors alike as a key indicator of economic trends — is clear: economic growth, while firmer, looks to have peaked, and any pick-up in inflation will likely prove transitory. “Markets have gone from thinking that growth is strong and inflation could be strong to saying growth has peaked and inflation is transient,” said Guy Miller, chief market strategist at Zurich Insurance Group. The turnaround in bond markets may not fit with the message from the U.S. Federal Reserve, which has just shifted to a hawkish bias and brought forward its trajectory for rate hikes. But even with that shift, the Fed does not expect to start raising rates until 2023 and, like other major central banks, has stressed it will look past any short-term rise in price pressures. Fed officials last month felt substantial further progress on the U.S. economic recovery “was generally seen as not having yet been met”. “You have to change your view given the facts that you are faced with – economic growth is not solid, inflation is not about to surge,” said Pictet Wealth Management strategist Frederik Ducrozet. The rush back into bonds comes as data reinforces the view that economic growth may have peaked. Data on Tuesday showed U.S. service sector activity grew at a moderate pace in June, while a closely-watched gauge of German investor sentiment fell more than expected in July. The bond rally would have inflicted losses on the multitude of traders with “short” Treasury positions – essentially a bet that yields would rise in line with a recovering economy – forcing many to liquidate those trades, pushing yields lower still. Plenty of investors, including the world’s biggest asset manager BlackRock, have been bearish on Treasuries. BlackRock reiterated its bearish bet on Wednesday. Yet yields have seen a steady 50 bps decline since March. Explanations for that slide vary; some cite demand from Europe and Japan where central banks are resolutely dovish. Others point to the liquidity swirling around the U.S. financial system as the Treasury spends its cash balance and the Federal Reserve sucks up $120 billion of bonds each month. But it may also be that despite the seemingly vibrant economic recovery, bond markets have had doubts on the outlook; yield declines are being led by “real” or inflation-adjusted borrowing costs, ING Bank analysts said in a note. U.S. 10-year real yields have slumped to minus 1%, the lowest since February, while German real yields are at three-month lows. It could be that the 1.77% U.S. 10-year nominal yield level touched in March will remain this year’s high as more of the “reflation” bets are forced to unwind, according to Mike Sewell, a portfolio manager at T.Rowe Price. “There is still some potential for that trade to reengage but that is more a 3rd or 4th quarter potential. Right now the reflation trade is not dead but it’s certainly hibernating,” Sewell said. Two other factors may be contributing to the nervousness. First, China, the world’s number two economy, also this week released data showing services sector growth slowing to a 14-month low. That, some analysts believe, is a blueprint for how developed economies will fare. Second, more countries — including China — are seeing a resurgence in COVID-19 caseloads and worries are growing about new, potentially more infectious variants. The Delta variant, now dominant in many countries, including the United States, is more easily transmitted than earlier versions of the coronavirus. “The muscle memory of markets is that governments will lock down again if they see cases rise, which means slower growth and that we are caught in a loop,” said Charles Diebel, head of fixed income at Mediolanum International Funds. Nick Note: The markets are getting a sniff of whats coming. Unfortunately for them a big shit storm is coming. And they will be blindsided….again!

FOMC Minutes Show Fed Ready To Taper Earlier Than Anticipated Since the last FOMC meeting (June 16th) – when Chair Powell admitted The Fed was talking about talking about talking about talking about tapering – bond (prices) have soared, gold has been dumped as the dollar surged… As a reminder, stocks tanked right after the Minutes, exaggerated by Bullard’s hawkishness… but were miraculously saved coincidentally right at the moment when The PPT was called to The White House… In recent days, the hawkish shift in market expectations that occurred right after the Fed meeting has waned a little Today’s Minutes will be all about how much “talking about” talking The Fed members actually did, what assets they discussed (MBS?), and how many of them are fearful of the bubble they’ve blown. As a reminder, 13 of 18 officials projected they would raise interest rates from near zero by 2023, with most expecting to raise their benchmark rate by 0.5 percentage point. Seven expected to raise rates next year. In March, most officials expected to hold rates steady through 2023. On ‘talking about’ the taper… Participants discussed the Federal Reserve’s asset purchases and progress toward the Committee’s goals since last December when the Committee adopted its guidance for asset purchases. The Committee’s standard of “substantial further progress” was generally seen as not having yet been met, though participants expected progress to continue. Various participants mentioned that they expected the conditions for beginning to reduce the pace of asset purchases to be met somewhat earlier than they had anticipated at previous meetings in light of incoming data. Some participants saw the incoming data as providing a less clear signal about the underlying economic momentum and judged that the Committee would have information in coming months to make a better assessment of the path of the labor market and inflation. As a result, several of these participants emphasized that the Committee should be patient in assessing progress toward its goals and in announcing changes to its plans for asset purchases. Nick Note: The Fed has got a great big problem. They got to taper NOW. The longer they fiddles fuck around the worse it will be. Before the end of the year they will have raised rates twice,,,,,,

https://youtu.be/5PyvXWMOodQ

PM hopeful restrictions can end on July 19 but warns pandemic is ‘far from over’

The final lifting of lockdown restrictions will go ahead in England on July 19 if all the tests are met, Boris Johnson has confirmed. Addressing the nation and flanked by Chief Medical Officer Professor Chris Whitty and Chief Scientific Adviser Sir Patrick Vallance, the PM said tonight (Monday, July 5) that step four of the roadmap plan is expected to go ahead. The final decision will be confirmed next Monday (July 12) following a review of the data and will see most rules end.

“I want to stress this pandemic is far from over,” the PM warned.

He added: “We must take a careful and balanced decision.” The vaccine rollout will be further accelerated by reducing the dosing interval for under-40s from 12 weeks to eight weeks. Nick Note: The fucks have learned nothing. The world need to go into lockdown for two weeks. The Delta covid19 mutation is a vaccine buster. We are back in lockdown with the millennials kicking and screaming all the way. This is a show stopper…..

OPEC+ abandoned efforts to break a deadlock within the cartel for a second night, increasing the risk its failure to act will unleash an inflationary spike in oil prices. Friday’s ministerial meeting ended without a deal as positions remained entrenched, with the United Arab Emirates still blocking a proposal to increase supply, delegates said. Negotiations will continue on Monday. Failure to agree on raising output would squeeze an already tight market, potentially sending oil prices sharply higher. Although most OPEC+ members back a proposal to add 400,000 barrels a day from August to December — and push back the expiry of their broader supply deal — the UAE remains staunchly opposed, according to delegates. The clash risks tarnishing the reputation of unity that the cartel has fought hard to preserve since it rescued the oil market from the depths of the crash last year. Abu Dhabi floated the idea of leaving OPEC in late 2020, and the bitter infighting over production quotas this week suggests tensions will persist. Crude prices have risen around 50 per cent this year, with the recovery in demand from the pandemic outpacing the revival of OPEC+ supplies after last year’s deep cuts. The U.S. administration voiced its unease over high gasoline prices on Friday, while central banks have been fretting about inflation. OPEC’s own data show that once-bloated oil inventories are back down to average levels as the recovery in fuel consumption continues. Demand in the second half will be 5 million barrels a day higher than in the first six months of the year, OPEC Secretary-General Mohammad Barkindo said on Tuesday.