The DC Today - Tuesday, February 27, 2024
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 27 February 2024
⏱️ 10 minutes
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Summary
Today's Post - https://bahnsen.co/3TeiRcu
A bit of a mixed day in markets with the Dow closing off its lows for the day down 96 points. The treasury raised $46B in seven year paper with a bid to cover ratio in the mid fifteens versus the thirteens where it has been (meaning there more buyers).
I suppose if the big news in Asia today was a ‘hotter’ inflation read at 2% in Japan with 10 year government bonds rising to their highest yield since 2011 at an eye popping .165%, its no wonder this auction near 4.32% cleared with more demand. Capital will always flow around the world where it is most rewarded and with attractive economic fundamentals and positive real yields, its why the US Dollar is nearing its 2020 pandemic apex and trading 17% above its historical average versus trading peers. Short term, this can make US exports more expensive which can slow growth, and also further trade imbalance as we already import more things then we export, but its a net positive long term. Tomorrows trade balance figures may reveal more there
Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com
Transcript
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| 0:00.0 | Welcome to the DC Today, your daily market synopsis of the Dividing Cafe, brought to you every Monday through Thursday to bring you up-to-date information and perspective on financial markets. |
| 0:13.6 | Hello, welcome to D.C. today. Brian Saitel with you on Tuesday, it's February the 27th. And here with you on a fairly quiet day, |
| 0:24.8 | really, in markets, we closed off of the lows, at least on the Dow. We still ended up slightly |
| 0:30.7 | negative. We were down about 96 points. S&P and NASDAQ'd out some small gains on the day. |
| 0:39.0 | Ten-year yields were down a couple basis points, two basis points. |
| 0:43.1 | So a bit of a quiet day, which is fine. |
| 0:45.4 | There was a seven-year treasury auction. |
| 0:49.0 | Actually, after the auctions yesterday, I think it was two and fives that were a little slower, |
| 0:53.2 | as far as bidders coming |
| 0:54.3 | in to buy by the supply that we have of new treasuries. Today's seven year actually went pretty |
| 0:59.8 | good. It was bid to cover of 15 and a half versus about a 13 to 1 on average. So a good |
| 1:07.5 | amount of buyers there. And what I wrote was if the big news out of Asia today was that Japan's inflation was much hotter than expected at a big 2% year-over-year inflation rate versus ours. |
| 1:23.2 | And their two-year government bond yields are now yielding 0.165%. |
| 1:28.8 | So 0.165%. |
| 1:31.0 | It's just no wonder that U.S. debt trading at 4.3% with arguably in most ways, and by most |
| 1:40.0 | metrics, the stronger underlying economy wouldn't attract bidders from around the world. |
| 1:45.9 | And that's, of course, what happens. |
| 1:47.9 | You know, capital flows around the world where it's most rewarded, risk adjusted, meaning |
| 1:53.1 | that you can get higher yields in parts of the world that are, you know, devaluing currencies, |
| 1:57.4 | you know, like South America or, you know, some of these places. |
| 2:02.1 | But risk adjusted, when you look at a strong credit like the U.S. and in these higher yields and frankly, higher yields |
| 2:08.1 | because of good fundamentals. So they're not higher yields because we're trying to restrict capital |
... |
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