A slew of disappointing data (hard and soft), government shutdown fears growing, collapsing GDP expectations, and declining earnings expectations... WTI and RBOB plunging, bonds bid, and gold higher... and then there's North Korea!!
What Does Elemetal Imply for Precious Metals?
Back in 2007/2008, Wall Street drastically pulled back on mortgage origination for their own balance sheets while ramping up their issuance of RMBS securities. Of course, the goal was very simple: package up all the mortgage-related nuclear waste on your balance sheet into a pretty package, tie a ribbon around it with that AAA-rating from Moody's and sell it all to unsuspecting pension funds and insurance companies around the globe.
After a strong 2 Year on Tuesday, poor 5 Year on Wednesday we close the week with the Treasury's sale of $28 billion in 7 Year paper in what can only be described as a spectacular auction.
The high yield priced at 2.084%, stopping 2bps through the 2.104%, the biggest gap between the two going back to January 2016.
The Bid to Cover was a whopping 2.733, the highest going all the way back to November 2012.
One of the recurring themes on this website over the past two years has been the growing threat posed by the flood of capital out of active investing and into passive, and far cheaper and better performing (under central planning) vehicles such as ETF.
For a quick rundown, here are some recent posts on the topic: