Baltic
Dry Index. 1874 -123 Brent Crude 77.13
Spot Gold 3353 US 2 Year Yield 3.94 Wed.
US Federal Debt. 37.000 trillion !!!
US GDP 30.083 trillion.
Both optimists and pessimists contribute to society. The optimist invents the aeroplane, the pessimist the parachute.
George Bernard Shaw
Overnight, Uncle Scam finally did it. US Federal Debt crossed the 37 trillion fiat dollars figure. Back in October 2023 it had only just reached 33 trillion. By comparison, in these good economic times, US GDP is only 30.083 trillion.
Thank to Presidents Clinton, Bush the lessor, Obama, Trump and Biden, we are witnessing the Decline and Fall of the Modern Roman Empire.
If you think the US Debt/GDP imbalance is bad now, just wait until we enter the next US and/or global recession. Uncle Scam’s debt will soar, the US GDP stagnate or even contract.
Given that we are 54 years into the Great Nixonian Error of Fiat money, electronically issued into existence out of nothing but electrons, gold and silver offer the only practical hedge against the coming financial catastrophe. The optimist invents fiat dollars, the pessimist invents Bitcoin.
200 Central Banks, Foreign Entities Dump $48B in
US Treasuries as Confidence in US Assets Falters
19 June 2025
Over 200 central banks and foreign
institutions have reportedly withdrawn considerable US Treasuries from the New
York Federal Reserve as custody holdings fell by £12.6
billion ($17 billion) last week and £35.7 billion ($48 billion) since late
March, adding to US dollar stability concerns. The trends intensified with US
President Donald Trump's tariff play that sparked global trade
tensions and triggered a market crash.
Central banks and entities like sovereign
wealth funds keep assets like Treasuries in the custody of the New York Fed.
The massive withdrawal has pushed up Treasury yields, possibly implying a
weakening foreign demand for US debt.
Proceeds from the sale of US debt are
placed in the New York Fed's reverse repurchase facility and exchanged for
Treasuries as collateral. In recent times, this trend has slowed down or even
reversed as foreign participation in the facility declined since March-end,
marking a significant drop in US assets held by foreigners at the reserve.
The greenback is deemed the world's
reserve currency, backed by the confidence that the US government will meet its
financial obligations. Hence, the US is able to borrow at relatively better
rates than its underlying finances would allow.
However, foreign investors shifting away
from the belief that US Treasuries might no longer be a safe haven could compel
the Treasury to pay higher yields to attract bond buyers. This action could
notably drive up borrowing costs, like higher interest rates for mortgages,
small-business loans, and other borrowing instruments, subsequently impacting
multiple sectors of the economy and putting the US government in a difficult
spot.
Torsten Sløk, chief economist at Apollo
Global Management, told Fortune that foreign buyers make up almost 30% of the
US Treasury market. A decrease in their participation could force the Treasury
to offer higher yields to attract buyers, affecting rates across the economy.
A sinking dollar is a growing concern
across Wall Street. As monetary authorities trim exposure to American bonds and
central bank buyers take a step back, economists are worried about more
volatility in the fixed-income market as global confidence in US assets
falters.
Bank of America Securities's managing
director, Meghan Swiber and fellow strategist Katie Craig also expressed
concern over the pullback of foreign private investors from the Treasury
securities market, highlighting that the current demand trends from these
investors are showing 'cracks.'
'The other big thing that we worry about
is the fact that foreign private investors may not be adding to Treasury
securities [and] may likely be stepping back from the market as well,' Swiber
told Fortune. 'So it creates a lot of concern around foreign investors
continuing to support the Treasury supply picture.'
More
200 Central Banks, Foreign Entities Dump $48B in US Treasuries as Confidence in US Assets Falters
Asia-Pacific markets mostly rise as investors
assess China data, escalating Israel-Iran tensions
Updated Fri, Jun 20 2025 12:37 AM EDT
Asia-Pacific markets mostly rose Friday as
investors assessed China data and monitored escalating
tensions between Israel and Iran.
U.S. President Donald Trump is now
weighing on whether to back the Israeli military and strike Tehran. The White
House said that he will make a final decision within the next two weeks.
Hong Kong’s Hang Seng Index added 1.15%
while mainland China’s CSI 300 index
added 0.24%, after the People’s Bank of China expectedly kept its loan rates
unchanged at 3.0% for the 1-year loan prime rate and 3.5% for the 5-year LPR.
Japan’s benchmark Nikkei 225 moved up 0.12%
and the broader Topix index fell 0.17% in choppy trade.
The country’s core inflation rate climbed
to 3.7% in May, its
highest level since January 2023. The metric — which strips out costs for
fresh food — was higher than the 3.6% expected by economists polled by Reuters
and is above April’s print of 3.5%.
In South Korea, the Kospi index increased by
1.19%, and crossed
the 3,000 mark for the first time in 42 months, while the small-cap Kosdaq
climbed 1.01%.
Over in Australia, the S&P/ASX 200 pared losses
to 0.2%.
India’s benchmark Nifty 50 opened 0.21% higher
while the BSE Sensex gained 0.29%.
U.S.
stock futures fell in early Asian hours as investors investors pored
through the latest developments in the Middle East.
Overnight stateside, regular trading was
closed for the Juneteenth holiday.
Asia
stock markets today: live updates for June 20 2025
In other news.
Shipping insurance costs spike in the Middle East
as Israel-Iran conflict rages
Published Thu, Jun 19 2025 3:37 AM EDT
Israel and Iran’s escalating
conflict has
significantly driven up the cost of insurance for ships sailing through the Red
Sea and Persian Gulf.
Marine insurers are now charging 0.2% of
the value of a ship for journeys into the Gulf, according to data from the
world’s largest insurance broker Marsh McLennan, up from 0.125% prior to
Israel’s surprise attack on Iran last
week.
There has also been an uptick in war risk
insurance rates for the Red Sea, Marsh said, while cover relating to ports in
Israel has more than tripled to 0.7%.
The length of time quotes are valid for
has been cut to 24 hours from most leaders, Marsh said, down from 48 hours
previously.
The scramble to reassess shipping
insurance costs reflects the deteriorating security environment in the Middle
East, with Israel and Iran continuing to exchange fresh air attacks over recent
days.
The conflict between the two powers has
ratcheted up concerns of a broader conflict, with many closely monitoring
the prospect of U.S.
intervention.
“Given that the situation is currently
contained within the region, risks are still being placed to enable cargo to
flow through these areas,” Marcus Baker, global head of marine, cargo and
logistics at Marsh, told CNBC by email.
Some shipowners have recently opted to
steer clear of the strategically
important Strait
of Hormuz, reaffirming a sense of industry unease amid the
conflict.
Jakob Larsen, head of security at Bimco,
which represents global shipowners, said earlier this week that the escalating
conflict was causing concerns in the shipowner community and prompting a
“modest drop” in the number of ships sailing through the area.
Situated between Iran and Oman, the Strait
of Hormuz is a narrow waterway that connects the Persian Gulf to the Arabian
Sea. It is recognized as one of
the world’s most important oil chokepoints.
The inability of oil to traverse through
the Strait of Hormuz, even temporarily, can ratchet up global energy prices,
raise shipping costs and create significant supply delays.
Israel-Iran
conflict: Shipping insurance costs jump in the Middle East
Switzerland enters era of zero interest rates
Published Thu, Jun 19 2025 3:37 AM EDT
The Swiss National Bank on Thursday cut
interest rates by a further 25 basis points to 0% — adding to concerns
over a potential return to negative rates.
The reduction was widely expected by
markets ahead of the decision, after traders priced in an around 81% chance of
a quarter-point cut and around a 19% chance of a bigger 50-basis-point cut.
“Inflationary pressure has decreased
compared to the previous quarter. With today’s easing of monetary policy, the
SNB is countering the lower inflationary pressure,” the central bank said in a
statement.
“The SNB will continue to monitor the
situation closely and adjust its monetary policy if necessary, to ensure that
inflation remains within the range consistent with price stability over the
medium term,” it added.
While other nations continue to battle
inflation, Switzerland faces deflation, with consumer
prices falling
by an annual 0.1% in May.
Low levels of inflation are not unusual
for Switzerland — the country has seen several periods of deflation in the
2010s and 2020s. The strength of the country’s currency, the Swiss franc, is a
major contributor to this trend.
“As a safe-haven currency, the Swiss franc
tends to appreciate when there is stress on world markets,” said Charlotte de
Montpellier, a senior economist covering France and Switzerland at ING.
“This systematically pushes down the price
of imported products. Switzerland is a small, open economy, and imports account
for a large proportion of CPI [consumer price index] inflation,” Montpellier
told CNBC ahead of the central bank’s announcement.
Amid high levels of global economic
uncertainty, the franc has continuously strengthened in recent months and is
widely expected to continue on this path, suggesting ongoing challenges for the
SNB.
As the strength of the franc has been the
primary driver of Switzerland’s low inflation, the SNB is now taking steps to
constrain the currency’s rally by keeping rates “systematically lower than
elsewhere,” Montpellier said.
After the interest rate decision,
the franc strengthened,
with the U.S. dollar last trading flat against the Swiss currency.
More
Switzerland enters
era of zero interest rates
Global Inflation/Stagflation/Recession
Watch.
Given
our Magic Money Tree central banksters and our spendthrift politicians,
inflation now needs an entire section of its own.
Rice
prices in Japan more than double in May as core inflation jumps to highest
levels since 2023
Published
Thu, Jun 19 2025 7:37 PM EDT
Rice
prices in Japan more than doubled in May, spiking 101.7% year over year and
marking their largest increase in over half a century.
The
huge spike follows a 98.4% increase in April, and a rise of 92.1% year over
year in March.
Japan’s
rice prices have been in
the spotlight in recent times, with the government releasing emergency
stockpiles to moderate the price of the country’s staple food.
The
surge in rice prices comes as Japan’s core inflation rate climbed
to 3.7% in May, marking its highest level since January 2023.
The
figure — which strips out costs for fresh food — was higher than the 3.6%
expected by economists polled by Reuters, and is above April’s reading of 3.5%.
Headline
inflation came in at 3.5%, lower compared to the 3.6% in April. This marks the
38th straight month that inflation has run above the BOJ’s 2% target.
The
so-called “core-core” inflation rate, which strips out prices of both fresh
food and energy and is closely monitored by the BOJ, climbed to 3.3% from 3% in
the month before.
Marcella
Chow, Global Market Strategist at JP Morgan Asset Management, noted that rice
accounts for approximately 50% of Japan’s core inflation, and future inflation
trends are heavily reliant on food prices, especially rice.
The
government’s recent measures to reduce rice prices could boost household
spending in the real economy, Chow told CNBC, “if these reductions extend to
processed foods containing rice and lead to lower restaurant prices.”
Separately,
Kei Okamura, a portfolio manager at Neuberger Berman, said that the inflation
numbers were not unexpected given the rise in food prices.
“We
are of the view, though, that over the next several months, we should see a
waning of these price pressures from foodstuffs,” he said on CNBC’s “Squawk Box Asia”.
He
added that rising geopolitical tensions in the Middle East could also have an
impact on energy prices.
The
inflation figure comes as the central bank held
rates at 0.5% after its monetary policy meeting earlier this week,
although it said in its statement that moves to pass on wage increases to
selling prices have continued, propping up core inflation.
BOJ Governor Kazuo Ueda reportedly told Japan’s
parliament last week that the central bank will continue to raise rates “once
we have more conviction that underlying inflation will approach 2% or hover
around that level.”
More
Rice
prices in Japan more than double in May as core inflation jumps to highest
levels since 2023
Bank
of England holds rates steady, but a summer cut could still be in the cards
Published
Thu, Jun 19 2025 7:01 AM EDT
The
Bank of England kept its key interest rate on hold at 4.25% during its Thursday
meeting, with economists expecting the central bank to wait until August before
it cuts again.
Six
out of nine of the BOE’s monetary policy committee opted to hold rates with
three opting for a 25-basis-points cut.
“Underlying
UK GDP [gross domestic product] growth appears to have remained weak, and the
labour market has continued to loosen, leading to clearer signs that a margin
of slack has opened up over time,” the central bank said in a statement.
“Measures
of pay growth have continued to moderate and, as in May, the Committee expects
a significant slowing over the rest of the year,” it said, adding that the MPC
“remains vigilant about the extent to which easing pay pressures will feed
through to consumer price inflation.”
The
central bank warned that “global uncertainty remains elevated” with energy
prices rising due to the escalation of the conflict in the Middle East. “The
Committee will remain sensitive to heightened unpredictability in the economic
and geopolitical environment, and will continue to update its assessment of
risks to the economy,” it added.
The
policymakers’ decision to hold rates comes after the latest data out Wednesday
showed the U.K.’s annual inflation rate reached 3.4% in May, meeting analyst
expectations but lingering far above the bank’s target of 2%.
Earlier
this year, the Bank of England said that it expects inflation to rise to 3.7%
in the third quarter, before starting to cool into next year. It nevertheless
still doesn’t know the outcome of U.S. President Donald Trump’s global tariffs
policy, and with conflict erupting in Middle East, inflationary pressures could
rise.
Those
pressures, coupled with lackluster U.K. growth after a 0.3% economic
contraction in April, put the central bank in a difficult position on whether —
and when — to cut rates.
“The
bank last month divided 5 [MPC members] to 4 over the decision to cut rates a
little, and the majority were very much seeing the economy slowing down and the
threat of a faster slow down if tariffs and other U.S. policy seep through the
economy, so that is the worry,” John Gieve, former deputy governor of the Bank
of England, told CNBC on Wednesday.
“The
question was, ‘Should we cut now or wait a little bit?’ That was the way they
were looking at it [then],” he added.
“The
Middle East conflict complicates things further. Firstly, it could have an
effect on oil prices which could push inflation up even further ... and,
secondly, it could be disruptive to the world economy and to trade, which again
would be a downward pressure on our growth, so that’s precisely where the bank
is right now,” he told CNBC’s “Squawk Box Europe.”
Economists
polled by Reuters widely expect BOE policymakers to cut rates by 25 basis
points (bps) at the next gathering in August, and to make a trim of another 25
bps in the fourth quarter.
More
Bank of England
holds rates for now, but a rate cut could come August
UK
growth to suffer from interest rates hold, industry warns
Thursday
19 June 2025 1:58 pm
The
UK economy stands to suffer from high borrowing costs, leading industry figures
have warned, after the Bank of England held interest rates at 4.25 per cent on
Thursday.
The
Bank’s Monetary Policy Committee (MPC) indicated that
interest rate cuts could come in the coming months after a recent 25 basis
point cut in May.
An
agreement to hold interest rates was made due to high inflation expectations, sticky wage growth data and
concerns over rallying oil prices due to the emerging conflict between Iran and
Israel.
But Bank officials struck a dovish tone on growth as it
upgraded its growth forecast for the second quarter of the year despite a 0.3
per cent GDP contraction in April, according to recent data published by the
Office for National Statistics (ONS).
Business
leaders have warned that a decision to hold interest rates could restrict
spending in the UK economy and hit Britons dealing with expensive mortgages and
a higher tax burden.
Suren
Thiru, economist at the Institute of Chartered Accountants in England and
Wales, said a decision to hold interest rates would be a “big blow” to people
struggling to pay off bills.
“Though
this policy loosening cycle is not yet over, this latest decision is further
confirmation that the speed of interest rate cuts remains especially cautious,
with policymakers wary over elevated inflation and intensifying international
instability,” Thiru said.
MPC
signals more interest rate cuts
IPPR
director Carsten Jung blamed bumpy growth this year on the Bank’s restrictive
monetary policy.
“This
year’s GDP growth has been lower than expected, in large part because interest
rates are being kept high for long,” Jung said.
“Even
when considering still-elevated inflation, the Bank continues to run an overly
restrictive policy, and it is harming ordinary households.
Three
MPC members, including deputy governor Dave Ramsden, voted for a 25 basis
cut, because of a weakened jobs market as shown in data provided by the
ONS and various business surveys.
They
highlighted wage growth data of 5.2 per cent in the three months to April,
which was lower than expected, as a key reason for their vote to be
warranted.
Low underlying growth estimates, which the Bank believes
to be closer to zero despite positive headline figures in the first quarter of
the year, also supported a “less restrictive policy path” as higher interest
rates put achieving two per cent inflation in the medium term at risk of being
undermined.
Markets
predict interest rates to be cut at the next meeting in August. Some economists
believe the MPC struck a more dovish tone in the minutes to its latest
decision.
More
UK
growth to suffer from interest rates hold, industry warns
Covid-19
Corner
This
section will continue only occasionally when something of interest occurs.
Technology
Update.
With events happening fast in the
development of solar power and graphene, among other things, I’ve added this
section. Updates as they get reported.
Today, renewable energy to blame for
Spain’s notorious power cut. Renewable energy not to blame for that notorious
Spanish blackout.
I suppose it depends on whether you’re
for renewable energy or not.
Renewable
energy to blame for Spain’s blackouts
Glut
of solar power sent prices plunging, triggering a mass switch-off, official
report says
18 June 2025 3:54pm BST
Spain’s disastrous national blackout was
triggered by solar farms switching off in response to plummeting power prices,
an official investigation has found...
More, subscription required
Renewable energy to blame for Spain’s blackouts
Spain’s
blackout: Cause finally revealed
By Farah Mokrani • Published: 18 Jun 2025 • 23:59
----Cities ground to a halt, thousands were stranded on
trains and in lifts, and daily life was thrown into chaos as a rare, massive
power outage swept across the Iberian Peninsula. Now, as officials untangle
what really went wrong, we’re finally getting answers—but they’re not all
pointing in the same direction.
So, what actually caused the blackout? According to the Spanish government,
the trouble started with Redeia, Spain’s grid operator, miscalculating the
right energy mix in the system. At the heart of the crisis was a voltage
surge—the electrical “push” that keeps power moving smoothly across the
network. Keeping voltage steady is crucial for grid stability, and when it goes
haywire, the whole system is at risk.
The government report says some
conventional power plants—those burning coal, gas, or nuclear—failed to do
their bit, letting voltage levels spike and triggering a domino effect of
shutdowns across the network. In short: not enough backup, not enough control,
and not enough power plants responding when it mattered.
Redeia, for its part, agrees that a
voltage surge triggered the crisis, but pushes back on the idea that its own
energy planning was at fault. Instead, it blames the conventional power
stations for not stepping in, and says an unexpected jump in demand from the
transport network only made things worse. So, the finger-pointing continues,
and the debate over exactly where the blame lies isn’t settled yet.
Spain
blackout 2025: Could it have been prevented?
In an ideal world, grid operators use a
whole toolkit of controls to balance frequency, voltage, and supply, making
sure that whatever happens, there’s enough juice in the right place at the
right time. But the government’s report reveals that on April 28, there simply
weren’t enough generators online to keep voltage in check—fewer, in fact, than
in previous weeks. Worse, not every unit that should have helped out actually
did.
Curiously, neither report has named the
companies running the power plants that dropped the ball. And while Spain’s
Energy Minister admits there was a lack of capacity to regulate voltage, Redeia
insists their calculations were solid and the real issue was that power plants
didn’t respond as planned.
But what about renewables? Given Spain’s
status as a European leader in solar and wind, some have wondered if green
energy might have played a part. Both the government and Redeia are adamant:
renewable energy was not the culprit. In fact, at the moment the grid crashed,
renewables were supplying a massive 59% of Spain’s electricity. As Redeia’s own
operations chief put it, “Had conventional power plants done their job, there
would have been no blackout.”
More
Spain’s blackout: Cause finally revealed « Euro Weekly News
Next, the
world global debt clock. Nations debts to GDP compared.
World Debt
Clocks (usdebtclock.org)
Another weekend and war or delayed war? Have a great summer/winter solstice weekend everyone.
Beware
of false knowledge; it is more dangerous than ignorance.
George
Bernard Shaw
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