The Banking and Strategy Initiative

Chillin' out till it needs to be funded

US Economy (EoD Review): Treasury liquidity constrained, yield stays a hopeful mark above previous auctions

Even as the Fed increased buying in Operation Twist to $9 bln, the M2 report shows the liquidity shruck as less goes around. Leading indicators up next however look good, and CPI is so low the 30 yr TIPs Auction went under (almost) for a $9 bln take reducing Bid Covers to 2.45, the lowest demand range, getting demand only from some long range pension funds that did not respond to market conditions

Though, unnoticed eCommerce in the Black Friday season rose to 4.8% of all retail, and that will probably be where online sales will stay for the Economy;  even as Q/Q basis growth rose from 2.6% at Q2 and Q3 to 5.8% in December 2011

Interestingly apart from the short sales currently on a mortgage bank discount sale many with houses not underwater, are unable to take advantage of the low refi rates (courtesy, Gail Dudack on Bloomberg TV), and one feels what is missing in the Economy as the focus continues on the many underwater, and credit safeguards and underwriting at banks is turning others back even when refi rates were almost below 4%.

Due next week are Existing and new home sales the MBA report and more Jobless claims, Monday being a holiday for Presidents’ Day and Iran doing a lot of Crude trade with Japan South Korea, and India as well as sugar, tea and probably other agri imports, making it unlikely for Asia to climb down on the Iran situation diplomatically even as US tres to get Turkey to implement its Iran sanctions, and levers on Japan and South Korea. China has arranged for alternate Crude supplies for half its demand and a quarter of the Worlds EIA demand from Saudi Arabia.

Gold is going to be up, whatever else is up or down..that’s the report card for 2012, not a  grate one, but not so sad.

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