As all the world knows, US 10yr Treasury Yields breached big chart levels at 4.34%, and jumped higher. If you’re sitting in Cash (short-duration instruments), or “T-Bill and Chill” as some call it, then this is a nice show. If you have to borrow money, it is not so much fun.
Among other things, all the banks (notably the Regionals that had a crisis earlier this year) that were underwater on their bond holdings, are now more underwater.
Jamie Dimon, head of JP Morgan, warned that US interest rates might be headed a lot higher.
These higher yields have been met with huge inflows into the Treasury long-maturity ETF, TLT:
Not surprisingly, a lot of companies can’t take these higher rates. They were struggling as it was. Bankruptcies have been soaring.
One of the “three big levels” that I mentioned has been broken. The others are: the Yen/USD at 150, and USD/gold at $2070.
USD/gold has been heading the other way. But, a Strong Dollar would, not too long from now, put pressure on the JPY/USD rate and also the EUR/USD rate, which also looks a little ugly.
As I’ve said, the US is not so hot, but Europe and Japan are worse. This much JPY/EUR weakness while the USD is still >$1900/oz. is a little spooky. USD Cash and Gold remain the go-to alternatives to both Stocks and Bonds.
Commodity experts Goehring and Rozencwajg became very bullish on gold in their 2Q23 report.
They talk a lot about a “valuation” of gold, but I have never thought that gold has much of a “valuation.” Its primary characteristic is that it is Stable in Value, which of course means that it is never “undervalued” or “overvalued.”