Home Big drop in 1-month treasury yields; Telegraphing the crash

Big drop in 1-month treasury yields; Telegraphing the crash

The User's Profile davefairtex April 23, 2023
placeholder image

Three reports:

  1. Existing Home Sales (EXHOSLUSM495S): -2.42% m/m, but +10% y/y.
  2. Philly Fed Manufacturing Index: expected -19.4, actual -31.3.  Recessionary.
  3. Fed Balance Sheet (WALCL): -21B w/w [-0.25% w/w].

Rates this week were mostly unchanged – except for that red-circled 1-month treasury yield which plunged an incredible 95 basis points in just one week!  Money continues to flood into very short-term Treasurys – all the other yields barely moved at all.  Was this all from bank deposits?

The large & small banks lost a total of 48 billion in deposits this week (FRED: DPSSCBW027NBOG, DPSLCBW027NBOG).  It doesn’t look all that dramatic, but there was a small decline.

Maybe it was about credit creation?

Total bank credit (FRED: TOTBKCR) fell by 22 billion over the past week and is down 290 billion since just mid-March.  People and companies are repaying debt – at least by more than they’re taking out new debt.  Roughly that’s a 1.8% credit decline (over a month), which – if it continues – will be a very deflationary annualized credit contraction.  But this week’s move wasn’t all that dramatic.  So the 1-month treasury yield move wasn’t about bank deposits or bank credit.  It must have been something else.

Gold had a bad week, falling 25.30 [-1.26%] to 1990.50, with all damage happening on Friday [-1.42%] in the overnight market – prior to the US market open.  This week’s swing high candle print was very bearish (70%), and Friday’s loss was enough to drop the daily into a downtrend.  But despite all the fuss, the banksters still aren’t very heavily short.  The open interest (OI) looks even weaker than the COT report (below).

Silver also fell, losing 0.40 [-1.58%], which was slightly worse than gold’s drop.  Silver’s losses happened on both Monday and Friday.  It looks like banksters don’t mind shorting silver at the moment.  [Note: several weeks back, I had different OI numbers, because “somebody” changed their page format in order to hose people like me, and so my automated page scanner got wrong values for open interest.  Sorry about that.  Now I do it by hand.]    Silver’s “long black” weekly candle was neutral, but the drop was enough to pull the daily into a downtrend, just as with gold.

The rest is exclusive content for members

Curious about what being a member offers? Sign up now for a risk-free trial and get a sneak peek into the premium content, features, and perks awaiting you on the other side.


Top Comment

Love Me Some Dave.
I look forward to Sunday every week!
Anonymous Author by sandy-loam