Summary: Gold keeps flying pressing the copper-to-gold ratio down to more than just a new record low. This is getting utterly insane. Part of that may be bullion is overextending its run, though there are legit fundamental reasons for the price surge. China’s bank situation appears to be deteriorating rapidly along with prospects for an already-beleaguered Chinese economy. All the recent data points to a collision between short run downside acceleration and the culmination of a nearly two decade-long depressionary journey that has China on the cusp of its own flat Beveridge.

Summary: Rather than forecasting from here how bad macro and money conditions might become, Argentina is back in the mainstream spotlight because it is caught up squarely in the eurodollar’s crosshairs. But what does that actually mean? Not only will we begin to answer that question, we’ll provide another important one adjacent to it: why doesn’t anyone know about this? What you’ll see is that the answer to the former is more understandable than the one to the latter.

Summary: Gold is finally breaking out, soaring a huge percent today reaching a new all-time high well north of $3500. The reasons why leave it with more upside. Those have nothing whatsoever to do with inflation or a “crashing” dollar. Quite the opposite. From Treasury bill yields to term SOFR, on the macro side with ISM, construction and consumer spending on services, the evidence for a flat Beveridge keeps getting bigger and that is what’s propelling gold. The fact bullion is massively illiquid just makes an even more robust signal.

Summary: It isn’t just right, it’s significant. More and more Economists and their like are admitting consumers were right. Their dour “vibe” the past few years really had been right after all. This isn’t merely an academic exercise meant to relitigate the past, however. Instead, if Economists are throwing in the towel on the upside, the same might be true for employers and then the shift in thinking becomes more than just, well, sentiment.

Summary: Waffles are back on the US rates menu, but they don’t seem connected to the slight back up in Treasury note yields. Instead, bills keep plowing lower. Anyway, most people simply want to know how low rates might end up going. We have a few ways of sketching a rough outline, starting with swaps then applying another new record low in CtG. In the real economy, getting to really low future ST rates was always going to be about Beveridge, though maybe not the one right now you were thinking.

Summary: Spoiler: the Fed cut by 25 bps. And though the dots did drop, there was no clear signal from policymakers even as the economy itself grows more not less certain. The greatest source of any uncertainty is proven again to be the Fed itself. The FOMC decision and the materials accompanying it were a fiasco of a debacle. No hawks nor doves, just chickens running around headless. The problem isn’t Beveridge or even unemployment, it’s entirely about evidence for momentum from here on.

Summary: The media keeps trying to make us care about Fed “independence” or just the Fed at all when current events merely affirm how there is no reason to. The dollar is rising again. Canada’s GDP plunged despite BoC rate cuts. South Korea is trying offset the eurodollar’s work. Most of all, though, Fed Governor Christopher Waller isn’t just recommending rate cuts, he’s carrying the FOMC by actually making sense. That’s never a good sign, for the Fed or anyone else.

Summary: They are trying to make us care about the Fed’s independence. Lisa Cook was fired by President Trump unleashing a tempest in a teapot. The truth of the matter is, with or without Ms. Cook rates are going down. The evidence continues to pile up for this coming from every direction. Housing prices fell again, consumers are expecting recession like they had in April, and copper-to-gold is hundredths of a pip above another multi-decade low. Not only are low rates coming, they are solidly NOT inflation as some continue to claim.

Summary: It’s time to talk about China. Something is up with it. In this case, that means neither up nor down for CNY as a start. Sideways yuan is nothing good, as history has shown. And goes with what’s being implied by the entire range of data coming out of the country for July. Banks in credit crisis pulling back more on lending. Now industry slowing significantly, consumer spending sharply contracting, and capital spending falling off a cliff. It sure looks like payback therefore of great interest not just for China’s sake.

Summary: Raw copper was taken off the tariff list resulting in an historic crash in copper prices. Removing that distortion revealed the real level of unspoiled copper to gold which also plunged, but to a new four-decade low surpassing March 2020 and 2008. That’s not all: India’s rupee plummeted to its own record low. Then the US BEA put out income data for the US economy which confirmed all these grim financial signals coming from all over the place. There are no cleanest dirty shirts, only increasing soiled ones. But what does that really mean?

Daily Briefing 8/13/25 section 2.

Daily Briefing 8/12/25 section 1.

Summary: How negative can swap spreads go? Both the 10-year and 30-year maturities once again nearly hit a record earlier this week. Having barely moved since April, the question is, why? That contrast to stocks which have been furiously re-risking is more than enormous, there is a profound set of differences at work. Swaps aren’t just betting for a set of pessimistic scenarios, they’re also betting against interference on the forward rate curve. It all comes down to what really happened in April. I don’t mean tariffs.

Summary: That makes five in a row. Five months after tariffs were applied to the USA’s largest trading partners, evidence for any possible “inflationary” impacts remains thin. The fact it isn’t completely absent, however, has become the latest basis for the new tariff-inflation expectation coming later this summer. Meanwhile, what was actually in the CPI related more closely to real economic conditions came to show the opposite. Believe it or not, the latter now includes the shelter index for the first time since early 2021! Just as we predicted, even that significant shift won’t matter to the wafflers.

Summary: Sweden cut. Bills are feeling the debt ceiling. Again. But the Fed didn’t just sit there doing nothing, it actually offered nothing. Its entire purpose is at least to pretend to be accomplished, to be in a position to offer guidance and clarity no matter how inane and off. This year’s FOMC can’t even manage to do that - and they just told the world.

Summary: Ever since the basis trade blowup, even before then, government officials have been mulling a change to the SLR. This is the Basel 3 rule which primarily governs bank capital and has been advertised by regulators as a possible fix to “Treasury market liquidity” in times of strain. If they don’t then immediately add the term “repo” to any plan, you know not to take it seriously. But who did it come to be this way? Today’s DDA looks at what’s happening now, the dives deep into the story behind it.

Summary: The end of the first quarter saw a mess of triggered deflation. While the conclusion of the second doesn’t have that, not right at this minute anyway, it isn’t anywhere close to enough different. The 4w bill is misbehaving and we’re seeing dealers take a particular interest in those and similar instruments. We also have swap spreads and the metal ratio scraping along at basically the same levels as April. The background context for the monetary and financial world at the start of 2025’s second half hasn’t changed much at all.

Summary: With another possible oil spike lurking, you might think it would add to the JGB market’s wariness over the BoJ. After all, the detached irrationality of Bank of Japan policy is the sole reason why ultra-long JGB bonds have sold off and as much as they have. It isn’t fear over government debt, its inflation lunacy in Tokyo. And this is another one you don’t have to take my word for. Instead, the rest of the markets clearly understand higher oil adds to the growing goods economy payback we see emerging already in places like Canada, Britain, and Europe. If all that wasn’t enough for a Friday, Chinese banks and its zombie producers both fit right in to all the rest.

Daily Briefing 6/16/25 section 1.

Daily Briefing 6/17/25 section 2.