Dec 15/Massive raid on gold and silver as the crooks supplied 10 billion dollars worth of comex gold short paper/silver whacked to below $16.00/Chinese bond market collapses and they halt trading/yuan collapses to 6.94 to the dollar/Euro crashes below 1.04/ German two year yields at record lows as collateral scarce/China sells massive amount of USA treasuries along with other central banks: this month no private buyers coming to the rescue to purchase the bonds/Gold demand in India rises 23% in November/Another massive 3 tonnes of gold leaves the comex/a massive 7 tonnes of gold leaves the GLD/no silver leaves the SLV / commentary has now been amended and complete

Gold at (1:30 am est) $1127.80 DOWN $33.50

silver  at $15.90:  DOWN 125 cents

Access market prices:

Gold: $1129.00

Silver: $16.00





The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning

The fix for London is at 5:30  am est (first fix) and 10 am est (second fix)

Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.

And now the fix recordings:

THURSDAY gold fix Shanghai

Shanghai morning fix Dec 15 (10:15 pm est last night): $  1181.31

NY ACCESS PRICE: $1143.00 (AT THE EXACT SAME TIME)/premium $38.31


Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1182.56



China rejects NY pricing of gold  as a fraud/arbitrage will now commence fully


London Fix: Dec 15: 5:30 am est:  $1132.45   (NY: same time:  $1131.30    5:30AM)

London Second fix Dec 15: 10 am est:  $1126.95 (NY same time: $1131.50    10 AM)


It seems that Shanghai pricing is higher than the other  two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex.

Also why would mining companies hand in their gold to the comex and receive constantly lower prices.  They would be open to lawsuits if they knowingly continue to supply the comex despite the fact that they could be receiving higher prices in Shanghai.


For comex gold: 


For silver:


Let us have a look at the data for today



In silver, the total open interest ROSE by 923 contracts UP to 164,479 with respect to YESTERDAY’S trading.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .822 BILLION TO BE EXACT or 117% of annual global silver production (ex Russia & ex China).



In gold, the total comex gold ROSE by 5077 contracts AS WE HAD A RISE IN  THE PRICE GOLD ($4.60 with YESTERDAY’S trading ).The total gold OI stands at 402,111 contracts. We are very close to the bottom with respect to OI.  Generally 390,000 should do it.

we had 158 notice(s) filed upon for 15,800 oz of gold.


With respect to our two criminal funds, the GLD and the SLV:


We had ANOTHER HUGE change in tonnes of gold at the GLD,  a withdrawal of 7.11 tonnes of gold/

Inventory rests tonight: 842.33 tonnes



we had no changes in silver,

THE SLV Inventory rests at: 341.063 million oz


First, here is an outline of what will be discussed tonight: Preliminary data

1. Today, we had the open interest in silver ROSE by 923 contracts UP to 164,479 AS THE the price of silver ROSE by $0.15 with YESTERDAY’S trading.  The gold open interest ROSE by 5077 contracts UP to 402,111  as the price of gold ROSE BY  $4.60 WITH YESTERDAY’S TRADING.

(report Harvey).

2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg


ii)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 22.85 POINTS OR 0.73%/ /Hang Sang closed DOWN 397.22  OR 1.77%. The Nikkei closed UP 20.80 OR 0.10%/Australia’s all ordinaires  CLOSED DOWN 0.79% /Chinese yuan (ONSHORE) closed DOWN at 6.9467/Oil FELL to 50.53 dollars per barrel for WTI and 53.61 for Brent. Stocks in Europe: ALL IN THE GREEN.  Offshore yuan trades  6.9351 yuan to the dollar vs 6.9467  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS AGAIN AS  MORE USA DOLLARS ATTEMPT TO  LEAVE CHINA’S SHORES /



none today


( zero hedge)


i)A very big story;  starting last night the Chinese bond market collapses as yield skyrocketed.  The onshore yuan collapsed as did the offshore.  The spreads narrowed as the POBC are desperate to keep dollars from leaving

( zero hedge)

ii)read carefully what Graham Summers states this morning:  Is China going to trigger a meltdown?

( Graham Summers/Phoenix Research capital)

iii)Extremely important:

We know have the TIC data and again China along with other foreign central banks are rapidly get rid of their USA treasuries.  For China the reason is to avoid deflation/for others funds are needed to balance their deficits.

Up until last month, we have private buyers of these long treasuries.  However for the first time, this month these private buyers were sellers.

This is putting a huge strain on yields and is a huge factor in their rise.  Yellen may have think twice if she is going to raise rates:

( zero hedge)


i)Next stop parity as the Euro crashes into the 103 column:

( zero hedge)

ii)German two year bond yield plummets to its nadir as their is a panic bid for collateral in Europe with dollar in scarce supply:

(courtesy zero hedge)


This is getting scary!  The USA now states that Vladimir Putin was personally involved in the election hacking:

( zero hedge)


as we discussed yesterday, the emerging markets will have a terrible time with the rise in USA rates.  Last night the central bank of Mexico rates it’s overnight rate by 50 basis points to 5.75% trying to stem the losses on the peso

( zero hedge)


As promised crude is heading southbound because of the non deal and increase production from Libya et al.

( zero hedge)


none today


i)Your crime scene for today:

( zero hedge)

ii)Bron writes that the silver smoking gun will stop the banks from trading in the futures silver/gold comex

( Bron Suchecki/Perth Mint director)

iii)Banks in India have been given a boost with the cash ban

( Bloomberg/GATA)

iv)Fleckenstein is now backed by jPMorgan and i need to say no more:

(courtesy GATA/ChrisPowell)

v)Modi introduced the banning of the two highest denominating bills and that had a devastating effect on the Indian economy. However it did not hurt gold imports;  it rose 23% .   However the trade deficit rose to 13 billion last month

(courtesy Times of India/GATA)



i)Faulty data:

( zerohedge)

ii)More faulty data:

( zero hedge)

iii)An absolute joke:  the Fed raises rates, interest rates are soaring, mortgage rates are exploding northbound mortgage applications collapsed and homebuilder confidence explodes higher?

( zero hedge)

iv)You knew that this was going to happen:  Trump electors are flooded with death threats:

( zero hedge)

v)As we have expected:  the Clinton investigation is back on as FBI agents in NY have been ordered to continue the foundation probe:

( zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY 5077 CONTRACTS UP to an OI level of 402,111 AS THE PRICE OF GOLD ROSE $4.60 with YESTERDAY’S trading. We are now in the contract month of December and it is the biggest of the year. Here the front month of December showed a INCREASE of 281 contracts UP to 1440.We had 0 notice(s) served upon yesterday so we GAINED 281 contracts or 28,100 oz will stand for delivery.

For the next delivery month of January we had a LOSS of 67 contracts DOWN to 2340. For the next big active delivery month of February we had a GAIN of 5172 contracts UP to 278,134.

We had 158 notice(s) filed upon today for  15,800 oz


And now for the wild silver comex results.  Total silver OI ROSE by 923 contracts FROM  163,556 UP TO 164,479 as the price of silver ROSE BY $0.15 with YESTERDAY’S trading. We are moving  further from the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540). We are now in the next major delivery month of December and here it ROSE BY 101 contracts UP to 555 CONTRACTS . We had 40 notices served upon yesterday so we GAINED 141 contracts or an additional 705,000 oz will stand for delivery

The next non active delivery month is January and here the OI fell by 268 contracts down to 1439.

The next big active delivery month is March and here the OI ROSE by 1051 contracts UP to 135,934 contracts.

We had 83 notices filed for 415,000 oz for the December contract.

Eventually at the end of December 2015: 6.4512 tonnes of gold stood for delivery

Eventually at the end of December 2015: 18.84 million oz of silver stood for delivery

VOLUMES: for the gold comex

Today the estimated volume was 160,719  contracts which is fair.

Yesterday’s confirmed volume was 226,970 contracts  which is good


Initial standings for DECEMBER
 Dec 15.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 96,745.072 oz
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
No of oz served (contracts) today
158 notice(s)
15,800 oz
No of oz to be served (notices)
1159 contracts
115,900 oz
Total monthly oz gold served (contracts) so far this month
8636 notices
863600 oz
26.861 tonnes
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil oz
Total accumulative withdrawal of gold from the Customer inventory this month     4,034,152.2 oz
Today we HAD 0 kilobar transactions/and again massive amounts of gold leaves the comex vaults.
Today we had 0 deposit(s) into the dealer:
total dealer deposits:  nil  oz
We had nil dealer withdrawals:
total dealer withdrawals:  nil oz
we had 0 customer deposit(s):
total customer deposits; nil oz
We had 3 customer withdrawal(s)
 i) out of Scotia; 61,772.409 oz
ii) Out of HSBC: 485.793 oz
iii) out of Brinks: 34,486.870 oz
total customer withdrawal: 96,745.072 oz
We had 0  adjustment(s)
Total dealer inventor 1,660,071.694 or 51.635 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 9,331,944.343 or 290.262 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 290.262 tonnes for a  loss of 13  tonnes over that period.  Since August 8/2016 we have lost 64 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!

For December:


Today, 0 notice(s) were issued from JPMorgan dealer account and 33 notices were issued from their client or customer account. The total of all issuance by all participants equates to 158 contract(s)  of which 10 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

To calculate the initial total number of gold ounces standing for the DECEMBER. contract month, we take the total number of notices filed so far for the month (8636) x 100 oz or 863,600 oz, to which we add the difference between the open interest for the front month of DEC (1440 contracts) minus the number of notices served upon today (158) x 100 oz per contract equals 991,800 oz, the number of ounces standing in this non  active month of DECEMBER.
Thus the INITIAL standings for gold for the DEC contract month:
No of notices served so far (8636) x 100 oz  or ounces + {OI for the front month (1440) minus the number of  notices served upon today (158) x 100 oz which equals 991,800 oz standing in this non active delivery month of DEC  (31.157 tonnes)
I have now gone over all of the final deliveries for this year and it is startling.
First of all:  in 2015 for the 12 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month.
Here are the final deliveries for 2016:
Jan 2016:  .5349 tonnes  (Jan is a non delivery month)
Feb 2015:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2015: 2.311 tonnes (March is a non delivery month)
April:  12.3917 tonnes (April is a delivery month/levels on the low side
And then something happens and from May forward deliveries boom!
May; 6.889 tonnes (May is a non delivery month)
June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge)
July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!)
August: 44.358 tonnes (August is a good delivery month and it came to fruition)
Sept:  8.4167 tonnes (Sept is a non delivery month)
Oct; 30.407 tonnes complete.
Nov.    8.3950 tonnes.
DEC.   31.157 tonnes
total for the 12 months;  223.736 tonnes
average 18.644 tonnes per month vs last yr 51 tonnes total for 12 months or 4.25 tonnes average per month. From May 2016 until Dec 2016 we have had: 199.471 tonnes per the 8 months or 24.933 tonnes per month (which includes the non delivery months of May, June and Sept).  In essence the demand for gold is skyrocketing.
Something big is going on inside the gold comex.
Just take a look at Nov 2016 deliveries at 8.3950 tonnes compared to last yr 0.6656 tonnes
December so far:  31.157 tonnes are standing vs last year’s  24 tonnes on first day notice and 6.45 tonnes on the completion of it’s delivery month.

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
And now for silver
 Dec 15. 2016
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
Deposits to the Dealer Inventory
nil  OZ
Deposits to the Customer Inventory 
1,159,478.909 oz
No of oz served today (contracts)
(415,000 OZ)
No of oz to be served (notices)
414 contracts
(2,070,000  oz)
Total monthly oz silver served (contracts) 3122 contracts (15,610,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz
Total accumulative withdrawal  of silver from the Customer inventory this month  2,934,513.9 oz
today, we had nil deposit(s) into the dealer account:
total dealer deposit: nil oz
we had nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 0 customer withdrawal(s):
 we had 1 customer deposit(s):
i) into JPM:  1,159,478.909 OZ
total customer deposits;  1,159,478.909  oz
 we had 0 adjustment(s)
Volumes: for silver comex
Today the estimated volume was 67,839 which is excellent
YESTERDAY’S  confirmed volume was 65,940 contracts  which excellent.
The total number of notices filed today for the DEC. contract month is represented by 83 contracts for 415,000 oz. To calculate the number of silver ounces that will stand for delivery in DEC., we take the total number of notices filed for the month so far at  3122 x 5,000 oz  = 15,610,000 oz to which we add the difference between the open interest for the front month of DEC (555) and the number of notices served upon today (83) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the DEC contract month:  3122(notices served so far)x 5000 oz +(555) OI for front month of DEC. ) -number of notices served upon today (83)x 5000 oz  equals  17,970,000 oz  of silver standing for the DEC contract month.
we GAINED 141 contracts or an additional 705,000 oz will stand for delivery in this active month of December..
Total dealer silver:  37.922 million (close to record low inventory  
Total number of dealer and customer silver:   181.505 million oz
The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.



And now the Gold inventory at the GLD
DEC 14/another huge withdrawal of 6.82 tonnes from the GLD/Inventory rests at 849.44 tonnes/
DEC 13/no changes in gold inventory at the GLD/Inventory rests at 856.26 tonnes
Dec 12/a withdrawal of 1.19 tonnes of gold from the GLD/Inventory rests at 856.26 tonnes
Dec 9/another huge withdrawal of 3.26 tonnes of gold leaves the GLD vaults on its way to Shanghai/Inventory rests this weekend at 857.45 tonnes
DEC 7/ a huge change in gold inventory/a withdrawal of 6.23 tonnesas this gold is heading towards Shanghai/inventory rests at 863.67 tonnes
Dec 6/no changes in gold inventory/inventory rests at 869.92 tonnes.
Dec 5./ a tiny withdrawal of .32 tonnes and this is probably to pay for fees/inventory rests tonight at 869.92 tonnes
Dec 2/a huge withdrawal of 13.64 tonnes of gold leaving the GLD vaults/no doubt this is heading to Shanghai taking advantage of the huge premium/inventory rests tonight at 870.22 tonnes
Dec 1/no change in gold inventory at the GLD/Inventory rests at 883.86 tonnes
Nov 29/no changes in gold inventory at the GLD/inventory rests at 885.04 tonnes
Nov 28/no change in gold inventory at the GLD/Inventory rests at 885.04 tonnes
Nov 25 We had a massive 19.87 tonnes of gold leave the GLD/this would be a paper loss not real gold (they only have paper gold in their inventory/total inventory: 885.04 tonnes
Nov 23/a huge withdrawal of paper gold from the GLD equal to 4.66 tonnes/inventory rests at 904.91 tonnes
NOV 22/no changes at the GLD/Inventory rests at 908.76 tonnes
Nov 18/no changes at the GLD/Inventory rests at 920.63 tonnes
Dec 15/ Inventory rests tonight at 842.33 tonnes


Now the SLV Inventory
Dec change in inventory at the SLV/Inventory rests at 341.063 million oz/
DEC 13/ a huge withdrawal of 1.802 million oz from the SLV/Inventory rests at 341.063 million oz
Dec 12/no change in silver inventory/inventory rests at 342.865 million oz/
Dec 9/no change in silver inventory/inventory rests at 342.865 million oz/
Dec 8/a huge withdrawal of 3.09 million oz from the SLV/Inventory rests at 342.865 million oz
DEC7/no changes in silver inventory at the SLV/Inventory rests at 345.995 million oz/
Dec 6/no changes in silver inventory at the SLV/inventory rests at 345.995 million oz
Dec 5/no changes in silver inventory at the SLV/inventory rests at 345.995 million oz/
Dec 2 a tiny withdrawal of 155,000 oz and this is probably to pay for fees/inventory rests at 345.995 million oz/
Dec 1/no changes in silver inventory at the SLV/inventory rests at 346.150 million oz/
Nov 29/no changes in silver inventory /inventory rests tonight at 346.150 million oz/
Nov 28/no change in silver inventory/inventory rests tonight at 346.150 million oz/
Nov 25/we had another withdrawal of 949,000 oz from the SLV/Inventory rests at 346.150 million oz
Nov 18/no changes in silver inventory at the SLV/Inventory rests at 356/253 million oz
Dec 15.2016: Inventory 341.063  million oz

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 8.4 percent to NAV usa funds and Negative 8.8% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.5%
Percentage of fund in silver:39.2%
cash .+0.3%( Dec 15/2016)
2. Sprott silver fund (PSLV): Premium RISES to +.30%!!!! NAV (Dec 15/2016) 
3. Sprott gold fund (PHYS): premium to NAV FALLS TO – 0.86% to NAV  ( Dec 15/2016)
Note: Sprott silver trust back  into POSITIVE territory at +0.30% /Sprott physical gold trust is back into NEGATIVE territory at -0.86%/Central fund of Canada’s is still in jail.


Major gold/silver stories for THURSDAY


Fed Raised Rates 0.25% – Rising Rates Positive For Gold

Fed Increases Rates 0.25% – Rising Interest Rates Positive For Gold

The Federal Reserve increased interest rates by 0.25% as expected yesterday leading to gold falling to lows last seen in February 2016 and the dollar rising to its highest level against the euro in 14 years.

Gold actually settled higher at $1,163.70 for the day yesterday. However gold futures slid to $1,156.70 an ounce in electronic trading on the rate decision at 1400 EST and soon gold was pushed down 1.3% to 10 month lows after the decision in less liquid after hour markets.

gold_interest_rates_2017Source: New York Federal Reserve for Fed Funds Rate, for Gold (PM fix)

Yellen announced a 0.25% increase in the benchmark rate to 0.50-0.75% as the Fed raised interest rates for the first time in a year.

The Fed signalled more rate hikes in 2017 as expected and once again attempted to appear hawkish and suggested they would increase interest rates three times in 2017.

It is important to remember that they promised three rate hikes for 2016 this time last year. Only one rate hike materialised – yesterday’s rate hike. It is prudent to focus on what the Fed does rather than what it says.

The Fed has been promising higher interest rates most years since 2008 and yet there have only been two interest rate rises since 2008. Yesterday’s rate rise was only the second rate rise since the 2008 financial crisis. The Fed frequently adopts a hawkish tone which consistently fools many market participants who buy into it.

Similar price weakness and poor sentiment happened at the end of last year when gold had an intermediate bottom on the last day of 2015, December 31 at $1,062.25 per ounce (LBMA AM Fix). This was prior to very strong gains in January 2016 and in the first half of 2016.

gold-prices-january-2016Gold prices in January, February 2016 (

Sentiment today is very similar to that seen at the end of last year. Part of the bearishness was because the Fed promised 3 rate rises in 2016. They managed just one – yesterday’s rate rise.

As the great orator, ex-President George W Bush once attempted to say:

“Fool me once, shame on you; fool me twice, shame on me…”

From a long term investor, pension owner and physical buyers perspective, it is prudent to ignore the noise and focus on the fact that the Fed’s monetary policies, along with most central banks in the world, remains extremely accommodating.

The market perception and narrative is that a rise in rates, even by a marginal 75 basis points will be negative for gold in 2017. This may be true in the short term as perception, even misguided perception, can drive markets in the short term.

However, rising interest rates per se are not negative for gold. What is negative is positive real interest rates and yields above the rate of inflation. This is unlikely to be seen any time soon.

The data and the historical record shows that rising interest rates are actually positive for gold. The most recent example we have of rising interest rates is when the Fed increased interest rates in the 2003 to 2006 period (see table above and research note here). As can be seen in the table above, in June 2003, the Fed funds rate was at 1% and by June 2006, it had been increased to over 5.5%.

Even if the Fed increases rates, interest rates remain close to zero not just in the U.S but in most major economies. Thus, there is no opportunity cost to owning the non yielding gold. Indeed there remains significant counterparty and systemic risk in keeping one’s savings in a bank and government bonds look like a bubble that is being supported by money printing and debt monetisation.

This period of ultra-loose monetary policies needs to come to end as soon as possible as debt levels are surging globally creating the real risk of a new debt crisis in 2017.

Gold is looking shaky in the short term and the technicals and momentum is on the side of the bears. This could push gold lower into year end, back to test support at $1,100/oz.

Today, after a near 50% correction in recent years, gold again has significant potential for substantial capital gains in 2017 and during the Trump Presidency.

For investors looking to diversify and hedge the significant risks facing us in 2017, gold is again at a very attractive entry point.

Gold and Silver Bullion – News and Commentary

Gold falls to over 10-mth low as Fed signals more rate hikes (

Gold hits 10-month low as Fed signals faster rate hikes in 2017 (

Gold moves lower as Fed hikes interest rates (

Gold Settles Higher But Slips Following Fed Rate Hike (

Blockchain Lures Central Banks as Danes Consider Minting E-Krone (

Why Gold Could Bottom on or Close to Today’s Rate Hike (

Gold is half of Indians’ physical assets, ahead of real estate (

UK economy ‘to slow sharply amid uncertainty and higher inflation’ (

West has questions to answer as Syria lies in ruins (

Greece’s row with eurozone deepens as creditors halt debt relief (


Gold Prices (LBMA AM)

15 Dec: USD 1,132.45, GBP 904.37 & EUR 1,080.70 per ounce
14 Dec: USD 1,160.95, GBP 917.38 & EUR 1,091.99 per ounce
13 Dec: USD 1,157.35, GBP 911.18 & EUR 1,090.80 per ounce
12 Dec: USD 1,154.40, GBP 916.82 & EUR 1,089.41 per ounce
09 Dec: USD 1,168.90, GBP 927.64 & EUR 1,100.75 per ounce
08 Dec: USD 1,174.75, GBP 925.47 & EUR 1,088.64 per ounce
07 Dec: USD 1,171.25, GBP 929.62 & EUR 1,092.19 per ounce

Silver Prices (LBMA)

15 Dec: USD 16.14, GBP 12.95 & EUR 15.51 per ounce
14 Dec: USD 17.11, GBP 13.52 & EUR 16.07 per ounce
13 Dec: USD 17.01, GBP 13.39 & EUR 16.04 per ounce
12 Dec: USD 16.86, GBP 13.34 & EUR 15.90 per ounce
09 Dec: USD 16.95, GBP 13.45 & EUR 16.03 per ounce
08 Dec: USD 17.13, GBP 13.50 & EUR 15.88 per ounce
07 Dec: USD 16.77, GBP 13.32 & EUR 15.64 per ounce

Recent Market Updates

– Silver Fixing By Banks Proven In Traders Chats
– Euro Crisis and Contagion Coming In 2017
– ECB ‘Bazooka’ Reloaded Until At Least December 2017 – Euro Gold Rises 1%; 13% YTD
– UK £6 Billion Worse Off After Multi Billion Pound Gold “Accounting Error”
– Buy Silver – May Replace Gold As Money In India
– Shariah Gold Standard Approved for $2 Trillion Islamic Finance Market
– Potential “Systemic Crisis In Eurozone” After Italy Votes No, Renzi Resigns
– Gold and Silver Will Protect From Coming Financial Crash – Rickards
– RBS Fail Bank of England Stress Test
– Peak Silver – Supply Deficits Mean Higher Prices
– Bail In Risk – €4 Trillion Banking System In Italy Poses Contagion Risk as Referendum Looms
– Gold Down 13.5% In 13 Days – Trump Bearish For Gold?
– War On Cash Just Got Real – India and Citibank In Australia

Mark O’Byrne
Executive Director




Your crime scene for today:

(courtesy zero hedge)

Silver Slammed As Gold Crashes Below $1150 On $10 Billion Post Fed Hike Puke

Gold is suffering the worst 6-week tumble since May 2013 and the last 24 hours have seen the losses accelerate as following The Fed’s second rate hike in a decade, someone dumped over $10 billion notional of the precious metal through the futures market. As the dollar surges to 14 year highs (and EUR tumbles) so silver also is plunging most since the election near a $15 handle once again.

over 90,000 contracts were puked through futures in the brief time after yesterday’s rate hike decision – over $10 billion notional, and that selling pressure has re-accelerated this morning


And silver is a bloodbath…


Post-Fed, all commodities are lower on the surging dollar…

(courtesy zero hedge)

(courtesy Bron Suchecki/Perth Mint director)

(courtesy GATA/Times of India)

Fleckenstein is surprised by gold’s price action but he shouldn’t be


10:35p ET Wednesday, December 14, 2016

Dear Friend of GATA and Gold:

Interviewed by King World News, money manager Bill Fleckenstein of Fleckenstein Capital acknowledges being confused by today’s price action in gold and silver.

“As for the metals,” Fleckenstein says, “I’m kind of surprised they were hit as hard as they were. … I don’t really see why gold should act so terribly.”

On his company’s internet site —

— Fleckenstein responds this way to a question asking whether there is a “plunge protection team” and whether the stock market is manipulated:

“The Working Group on Financial Markets (a.k.a the ‘PPT’) does exist. But the thesis that it or any other part of government somehow manipulates the stock market on a day-to-day basis is not credible, largely because there are too many adversarial moving parts and keeping such activities a secret with so many people involved over the years would be impossible.”

Yes, keeping market manipulation on such a scale a secret may be impossible. Maybe that’s why it’s not a secret at all. But Fleckenstein sounds as if he hasn’t been following the financial news for a few years, not even for the last few days, during which the already infamous Deutsche Bank transcripts of market rigging were reported. As for rigging of the gold market by government, that hasn’t been a secret for a long time either. Indeed, too many people have been involved for it to stay secret, and many official documents of that rigging have been compiled by GATA here:

So why is Fleckenstein confused and surprised about the gold price? Gold never does what it is supposed to do — because central banks are always surreptitiously intervening in the gold market. To use the words of the director of market operations for the Banque de France, Alexandre Gautier, central banks are secretly intervening in the gold market “nearly on a daily basis”:

Just because Fleckenstein doesn’t know something doesn’t make it a secret. It just makes him ignorant, and maybe too arrogant to care.

His befuddled comments to King World News today can be found here:…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.





Modi introduced the banning of the two highest denominating bills and that had a devastating effect on the Indian economy. However it did not hurt gold imports;  it rose 23% .   However the trade deficit rose to 13 billion last month

(courtesy Times of India/GATA)


India: Gold imports rise 23%; exports increase 2.2% in NovemberThe increase in gold imports in demonetisation-hit November pushed up trade deficit to $13 billion. krishnamachari krishnamachari

S V Krishnamachari

  • December 15, 2016 20:59 IST

Provisional data released by the Narendra Modi government on Thursday showed that import of crude and petroleum products increased 5.89 percent to $6.84 billion from $6.45 billion in November last year. The import bill is likely to go up in view of the rise in global crude oil prices after OPEC and non-OPEC producers decided to cut oil output to stem the freefall in prices.Export of engineering goods rose 11.56 percent to $4.96 billion from $4.45 billion last November, after registering a 13.8 percent YoY jump in October this year. Total merchandise exports stood at $174.92 billion for the period April-November 2016.This is the first month of trade data after the decision to ban high-value currencies by Prime Minister Narendra Modi on November 8, 2016, leading to a major disruption of the Indian economy.Out of 30 categories, 20 saw an increase in exports on a year-on-year basis.The trend indicates that India would end the current financial year with exports of about $280 billion, according to the Federation of Indian Export Organisations (FIEO).”…looking at the current trend, we are on our course to achieve exports of about USD 270-280 billion during the current fiscal. The focus in such challenging times should on marketing with proactive support from the government which also has to ensure that exporters get their entitlements expeditiously so as to have liquidity,” FIEO President S C Ralhan said in a statement.After the adverse impact of US Federal Reserve’s interest rate hike decision on Indian stock markets, Thursday’s external trade data could lift sentiments on Friday. exports-increase-2-2-november-708593


Your early THURSDAY morning currency, Asian stock market results,  important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight



2. Nikkei closed UP 320.18 POINTS OR 0.10% /USA: YEN RISES TO 118.43

3. Europe stocks opened ALL IN THE GREEN     ( /USA dollar index RISES TO  103.10/Euro DOWN to 1.0417


3c Nikkei now JUST BELOW 17,000

3d USA/Yen rate now well below the important 120 barrier this morning

3e WTI::  50.43  and Brent: 53.61

3f Gold DOWN/Yen DOWN

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS  AND SELLING THE SHORT END

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.

3h Oil DOWN for WTI and DOWN for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS TO +365.%/Italian 10 yr bond yield RISES 6 full basis points to 1.867%    

3j Greek 10 year bond yield RISES to  : 7.34%   

3k Gold at $1127.00/silver $16.02(7:45 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP  67/100 in  roubles/dollar) 61.87-

3m oil into the 50 dollar handle for WTI and 53 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT a HUGE   DEVALUATION DOWNWARD from POBC.


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0313 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0743 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.365%


The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”.  Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 2.60% early this morning. Thirty year rate  at 3.18% /POLICY ERROR)GETTING DANGEROUSLY HIGH

5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.

(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)


Dollar Surges, Yields Soar, Euro Tumbles To 13 Year Low As Markets React To Hawkish Fed

This morning the world awakes to a landscape in which markets are frantically rushing to catch up to a suddenly hawkish Fed which not only hiked for the second time in a decade but, as per yesterday’s Fed statement and Yellen press conference, realized it has been behind the curve all along, and the result has been a spike in the dollar across virtually all currency pairs with the USDJPY surging above 118.40, coupled with a jump in bond yields around the globe as bond (the US 10 Year is trading at 2.64%, the highest since September 2014) as traders dump any hint of duration.

The sentiment was notable in the analyst commentary this morning:

  • “The Fed is becoming a leopard with new spots,” said Stephen Gallo, currency analyst at BMO Capital Markets in London. “The Fed has shifted its 2017 bias away from supporting growth with ultra-stimulative policies towards keeping a lid on inflation risk.”
  • “Maybe Fed officials are more concerned about the prospects for a rise in inflation next year than they are letting on, given the potential boost a fiscal stimulus could bring, which was something they didn’t have to consider last year,” Michael Hewson, a market analyst at CMC Markets in London, wrote in a note.
  • “You had the Fed come in and be a bit more hawkish that many people, including us, were expecting,” said TD Securities head of global strategy Richard Kelly. “It wasn’t just the move in the dots, it was the language that was used. There was an acknowledgement that if Trump gets his plans moving through congress you could see the economy pushing higher.”

DB’s Jim Reid had a different angle: it will be all about the volatility in rates in the coming year, as the Fed has officially unleashed the inflationary genie out of the bottle.

People in my profession have perhaps been guilty of over analysing the Fed in recent years when every small nuance was over examined when in reality they really haven’t done much over this period. However last night’s statement and press conference was full of interesting remarks and certainly landed on the hawkish side with the dots edging up with the median dot now showing 3 hikes for 2017 rather than 2 beforehand. Last night’s meeting broke a trend as prior to this, the last six FOMCs have seen treasury yields fall with the last seven seeing the dollar fall against the Euro. Not this time. The meeting fits in with our view that markets are vulnerable to a bond yield spike next year. Rates vol could be the main talking point of 2017.

In equities, after yesterday’s drop, the biggest since the election, Asian stocks fell but European equities rose driven by financials while S&P futures are already getting the BTFD treatment and trying to make up for Thursday’s drop .

It wasn’t just the Fed tightening monetary policy. Shortly after the Fed announcement, virtually all Gulf Arab states followed suit out of necessity to keep their dollar pegs. As Bloomberg notes, policy makers in Saudi Arabia, the United Arab Emirates, Kuwait, Bahrain and Qatar raised borrowing costs within hours after the Fed raised its benchmark rate for the first time this year. The prospect of further increases in U.S. rates next year will complicate efforts to bolster economic growth and ease a cash squeeze among Gulf banks as revenue from oil exports, the region’s main source of income, plummets.

However, while stocks are modestly higher, the big story this morning is all about the Dollar, which continues its relentless surge higher, in the process pushing the USDJPY, as the Yen tumbles over 1%, and sending the pair to 118.30, the highet level since the start of the year…

… but more notably the Euro, which moments ago also plunged by 1% to 1.043, dropping to the lowest level since January 2003.

The dollar also extended its advance against all major and emerging-market peers.

The bloodbath was not confined to FX, however, as global government bonds were left reeling this morning, with the 10Y Treasury spiking to 2.64%, the highest level in over two years, while European bonds likewise tumbled, sending 10Y yields surging as follows:

  • Spain +6bps at 1.46%;
  • Italy +6bps at 1.85%,
  • Portugal +4bps at 3.82%,
  • German +7bps at 0.37%;
  • Dec. bund futures -95 ticks at 161.51

This all follows this morning record crash in Chinese bond futures, which sent local 10Y yields higher by 22 bps, the most on record, to 3.45%, as a plunging yuan and hawkish Fed comments damped expectations of monetary easing in China.

In early trading, stocks were ignoring the momentous moves in FX and rates, and for now stocks in Europe and US futures traded higher, with the Stoxx Europe 600 Index rising 0.3 percent, led by banks.Randgold Resources Ltd., Fresnillo Plc and Centamin Plc fell more than 7 percent with declines in precious metals, while Electricite de France SA sank the most on record after saying profit will drop next year. The VStoxx Index declined 9 percent to the lowest level since September 2014, signaling traders are pulling back from hedging against swings in euro area shares.

In the U.S., futures on the S&P 500 Index were up about 0.2% after the equity gauge posted its biggest loss in two months on Wednesday, however should the bond collapse continue we fear the green will quickly shift to red.

* * *

Bulletin Headline Summary From RanSquawk

  • European bourses enter the North American crossover higher with financials outperforming
  • USD strength remains the key theme in FX markets with USD/JPY remaining north of 118.00
  • Looking ahead, highlights include SNB, Norges Bank, BoE rate decisions, US CPI, Philadelphia Mfg Index, NY Empire and Weekly Jobs

Market Snapshot:

  • S&P 500 futures up less than 0.2% to 2255.2
  • Stoxx 600 up 0.2% to 356
  • FTSE 100 down 0.2% to 6934
  • DAX up 0.5% to 11302
  • German 10Yr yield up 7bps to 0.37%
  • Italian 10Yr yield up 5bps to 1.84%
  • Spanish 10Yr yield up 5bps to 1.45%
  • S&P GSCI Index up 0.1% to 391.5
  • MSCI Asia Pacific down 1.7% to 136
  • Nikkei 225 up 0.1% to 19274
  • Hang Seng down 1.8% to 22059
  • Shanghai Composite down 0.7% to 3118
  • S&P/ASX 200 down 0.8% to 5539
  • US 10-yr yield up 2bps to 2.59%
  • Dollar Index up 0.67% to 102.44
  • WTI Crude futures up 0.4% to $51.23
  • Brent Futures up 0.8% to $54.33
  • Gold spot down 0.4% to $1,138
  • Silver spot down 1.7% to $16.56

Global Headlines

  • Molina CEO Tells Aetna-Humana Judge Company Isn’t ‘Trivial’
  • Exxon Names Darren Woods as New CEO to Replace Rex Tillerson
  • Laureate Said to Raise Over $300 Million From Apollo, Abraaj
  • Lonza Focuses on Health With $5.5 Billion Deal for Capsugel
  • Dubai Said to Plan $36 Billion Spend on World’s Biggest Airport

Asian equity markets traded mostly negative as the region reacted to the FOMC rate decision and steeper projected rate path. This pressured US stocks and dampened bourses across Asia with ASX 200 (-0.8%) led lower by commodity names after around 4%-5% declines in oil and iron ore, while gold slumped around USD 20. Hang Seng (-1.8%) and Shanghai Comp. (-0.7%) were also weighed by the developments across the Pacific and as regulators continued to impact risk appetite, with the CIRC seeking to lower the total proportion of equity assets held by insurance funds to 30% from 40%. Nikkei 225 (+0.4%) outperformed as downside pressure was overshadowed by JPY weakness which resulted to firm gains in large auto names, while 10yr JGBs saw spill-over selling from T-notes and fell below 150.00 as yields rose across the curve in reaction to the prospects of a steeper Fed rate hike path. However, prices were off worst levels following a 20yr JGB auction in which the b/c increased from prior and tail in price narrowed. PBoC injected CNY 140bIn 7-day reverse repos, CNY 45bIn in 14-day reverse repos, CNY 60bIn in 28-day reverse repos.

Top Asian News

  • Indonesia Keeps Benchmark Rate Unchanged as Rupiah Slumps on Fed: Decision was forecast by all but one of 21 economists surveyed
  • China Deploying Weapons on Artificial Reefs, Think Tank Says: China appears to be deploying weapons systems on all seven of the reefs it has reclaimed in the South China Sea, according to Washington-based Asia Maritime Transparency Initiative
  • Japan Said to Assess Risks Tied to Banks’ Treasury Holdings: FSA said to survey banks on their U.S. bond portfolios
  • Top Nickel Shipper Drags Out Mining Audit as Lopez Holds On: Final results of checkup are now due in January, Philippines Environment Secretary Gina Lopez says
  • Goldman’s Logistics Spat Fast-Tracked in Test for Indian Courts: Commercial court in Telangana to begin hearing case against an Indian logistics company on Dec. 29

European markets trade higher as analysts and traders digests the key points from last night’s FOMC rate decision. Financials are outperforming at the top of the leader boards with 3 rate hikes touted for next year. The materials sector is feeling the pinch after the stronger dollar and low gold prices take their toll. In equity specific news Lonza Group (LONN VX) have confirmed they are to buy Capsugel for USD 5.5bIn this sent shares tumbling to the bottom of the SMI down as much as 10%. Fixed income markets have seen prices fall dramatically at the start of the session, Bunds currently trade near session lows at around 161.58 but north of the contract low seen at 159.91. This was largely inline with the moves seen in the T-Notes after the FOMC statement. Gilts are also underperforming down 120 ticks but we could also see some more volatility with the BoE also today. Note a full preview is available on our headline feed.

Top European News

  • EDF Sees Ebitda Falling to EU13.7b-EU14.3b in 2017
  • Metro Group to Demerge, Split Into Two Separate Companies
  • Lonza to Buy Capsugel for $5.5b
  • H&M Sales Miss Estimates in November, 4Q
  • SNB Joins Draghi in Warning of Dread for 2017 Political Calendar
  • VW Posts First Europe Market-Share Gain Since Diesel Crisis

In currencies, the dollar gained 0.5 percent to $1.0486 per euro as of 10:38 a.m. London time. A move through $1.0458 would make the greenback the strongest since 2003. The U.S. currency climbed 1 percent against the yen, reaching the highest level since February. The Fed lifted its target for overnight borrowing costs by 25 basis points, or 0.25 percentage point, on Wednesday to a range of 0.5 percent to 0.75 percent. Policy makers expect three rate increases in 2017, up from the two seen in September.

In commodities, gold for immediate delivery was down 0.4 percent to $1,137.79 an ounce, sliding to its lowest price since February. The commodity has lost 14 percent since the end of September. West Texas Intermediate crude was up 0.5 percent at $51.28 a barrel, after Wednesday’s 3.7 percent slide. Libya is preparing this week to ship the first cargo from its largest export terminal in two years.

Looking at the day ahead, the main highlight data wise will likely be the November inflation report. The market is expecting headline CPI to increase +0.2% mom and the core to also increase +0.2% mom, a view also shared by our US economists. Meanwhile, the latest weekly initial jobless claims data will be out alongside Empire manufacturing and the Philly Fed manufacturing reports for December. Lastly the NAHB housing market index reading will be out too. Away from the data, Japan PM Abe and Russia President Putin are scheduled to hold a meeting aimed at proposing economic cooperation between the two countries. The ECB will also publish the net take-up for TLTRO II. Finally EU leaders are also due to gather to discuss migration and security issues, as well as debate the Brexit process in Brussels this morning.

US Event Calendar

  • 8:30am: Current Account Balance, 3Q, est. -$111.6b (prior – $119.9b)
  • 8:30am: Empire Manufacturing, Dec., est. 4 (prior 1.5)
  • 8:30am: CPI m/m, Nov., est. 0.2% (prior 0.4%)
  • 8:30am: Initial Jobless Claims, Dec. 10, est. 255k (prior 258k)
  • 8:30am: Philadelphia Fed Business Outlook, Dec., est. 9.1 (prior 7.6)
  • 9:45am: Bloomberg Consumer Comfort, Dec. 11 (prior 45.1)
  • 9:45am: Markit U.S. Manufacturing PMI, Dec. P, est. 54.5 (prior 54.1)
  • 10am: Freddie Mac mortgage rates
  • 10:30am: Bank of Canada’s Poloz speaks in Ottawa
  • 10:30am: EIA natural-gas storage change

* * *

DB’s Jim reid concludes the overnight wrap

People in my profession have perhaps been guilty of over analysing the Fed in recent years when every small nuance was over examined when in reality they really haven’t done much over this period. However last night’s statement and press conference was full of interesting remarks and certainly landed on the hawkish side with the dots edging up with the median dot now showing 3 hikes for 2017 rather than 2 beforehand. Last night’s meeting broke a trend as prior to this, the last six FOMCs have seen treasury yields fall with the last seven seeing the dollar fall against the Euro. Not this time. The meeting fits in with our view that markets are vulnerable to a bond yield spike next year. Rates vol could be the main talking point of 2017.

The first takeaway was some of the subtle tweaks in the tone of the statement. The committee highlighted the “considerable” pickup in inflation compensation and also the “decline” in the unemployment rate. Risks were still referenced as being “roughly balanced” which is something DB’s Peter Hooper believes is the committee’s way of recognising the fact that risks may never be perfectly balanced. Meanwhile, there was a subtle shift in the way the committee recognises how accommodative policy is now, toning down the extent to which it is accommodative by adding “some” to the observation that it is enough to support some further strengthening in the labour market. The signalling of a gradual pace of rate hikes was left as is.

The dots caused the most excitement however. As highlighted at the top the median dot for 2017 rose to 3 hikes from 2. In fact the number of committee members now forecasting just 2 hikes or less next year is only 6 out of 17. It had been 10 committee members at the last forecast. In other words 4 committee members shifted to 3 or more hikes. So a fairly convincing move. The 2018 and 2019 median dots were left at 3 hikes apiece while the longer run dot moved back to 3% after having been split between 2.75% and 3.0% last time out. Economic projections were a bit more of a non-event with growth and inflation forecasts revised up slightly and unemployment revised down.

Fed Chair Yellen’s press conference offered the final few interesting snippets. She made special mention in particular to the change in the dots being “really very tiny” which was seen as her way of softening the hawkishness of them. She also added that she never said that she favoured “running a high pressure” economy and wanted to make it clear that she has “not recommended running a hot economy as some sort of experiment”. A reminder that back in October Yellen had said at a speech in Boston that there might be benefits to temporarily letting the economy run hot with robust aggregate demand and a tight labour market to reverse adverse supply side effects. Meanwhile, when asked about fiscal stimulus Yellen said that “fiscal policy is not obviously needed to provide stimulus to help us get back to full employment”. When asked about the Fed’s response to fiscal, DB’s Peter Hooper highlighted that she did not explicitly say they would raise rates faster, but rather left that implicit in her response.

In terms of the market the immediate reaction function came in rates where the Treasury curve bear flattened in response. 10y yields smashed through 2.50% to close up +9.9bps on the day at 2.572% which is the highest since September 2014. 5y Treasury yields went through 2% and closed +13.9bps higher on the day at 2.049% which is the highest since April 2011. 2y yields finished up +10.4bps at 1.269% and the highest since August 2009. Futures also moved to price in a bit more than 2 rate hikes by December 2017. Also noticeable was the 2y Bund/Treasury spread which has now blown out to 205bps and the widest since 2000 while the 10y Bund/Treasury spread hit 227bps and is, amazingly, the widest since 1989. Currency markets weren’t to be ruled out with the US Dollar index touching highs last seen in 2003. That came largely at the expense of emerging market currencies which plummeted anywhere from -1% to -2%. Risk assets suffered meanwhile. The S&P 500 (-0.81%) had its worst day since October 11th while credit spreads finished wider with CDX IG nearly 2bps wider by the end of play. In commodities Gold (-1.35%) tumbled below $1150/oz while WTI Oil, weighed down by the rally for the USD and also some bearish supply data in the US, plummeted -3.66% and back to $51/bbl.

This morning in Asia the bond sell-off has continued with benchmark 10y yields in the antipodeans 10-11bps higher and 10y JGB yields also back up +2.5bps to 0.073%. Equity markets have followed the Wall Street lead and retreated. The Nikkei (-0.15%), Hang Seng (-1.69%), Shanghai Comp (-0.29%), Kospi (-0.04%) and ASX (-0.62%) all down. In credit the iTraxx Asia is 4bps wider currently.

Moving on. Today brings another central bank into focus with the BoE MPC meeting outcome due around midday. Both the market and our economists expect no surprises with current policy settings to stay as is. Indeed our economists expect the BoE to maintain the broadly neutral stance that they adopted at the November MPC meeting. Firstly, they highlight that the economy appears to be holding up well and consensus expectations for 2017 GDP growth have risen to 1.3%, albeit no higher than the MPC’s own forecast (1.4%). Secondly, sterling’s recent appreciation may reduce peak inflation marginally, although there is still a net 15% depreciation relative to late 2015 and recent data shows increasing evidence of pass through into core goods prices. Ultimately our colleagues think that the MPC will not rush to judgement this week and the neutral bias will remain. Their baseline view is that UK monetary policy won’t change in 2017 and sovereign QE will be allowed to end in Q1. However, with the real income shock coming they see a higher probability of the next move being an easing rather than a tightening.

Staying in the UK, yesterday Brexit Secretary David Davis spoke and didn’t rule out the possibility of a transitional deal ‘if necessary’ as a kind of ‘bridge’ for the UK leaving the EU. Putting him more on side with Chancellor Hammond, Davis also indicated that ‘an implementation phase’ could be a possibility. He also noted that the Government will not reveal Brexit plans before February. In any case the overall rhetoric from Davis clearly favours the recent move towards a softer exit. Sterling had initially been as much as half a percent stronger before the post-FOMC Dollar rally saw the Pound finish weaker.
Before we look at the day ahead, it was also a fairly busy day for economic data yesterday. In the US the primary focus was on the November retail sales report. Headline sales were up less than expected during the month (+0.1% mom vs. +0.3% expected) while the ex auto and gas component was also softer than expected (+0.2% mom vs. +0.4% expected). The GDP-sensitive control group component also missed (+0.1% mom vs. +0.3% expected) which will likely create some downside risks to Q4 GDP although by now the focus may have already turned to 2017 growth. Meanwhile there was also some softness in last month’s industrial production print (-0.4% mom vs. -0.3% expected) with capacity utilization also declining four-tenths to 75.0%. Elsewhere, producer prices were reported as rising more than expected. Headline PPI rose to +0.4% mom (vs. +0.1% expected) helping to raise the YoY rate to +1.3% from +0.8%.

In the UK the ILO unemployment rate was reported as holding steady in October at 4.8% although employment did decline a modest 6k with the statistics office noting that the labour market ‘appears to have flattened off in recent months’. There was better news in the earnings data however with average weekly earnings rising one-tenth to +2.5% yoy. Ex-bonuses rose to +2.6% yoy which is the fastest pace since August last year. Finally in France there were no last minute surprises in the November CPI report with consumer prices reported as unchanged during the month. For completeness in markets yesterday, European equity markets were generally weaker across the board with the Stoxx 600 finishing -0.50% prior to the Fed. Sovereign bond markets were firmer, albeit also pre-Fed clearly.

Looking at the day ahead the early focus in Europe this morning is on the December flash PMI’s where we’ll get manufacturing, services and composite readings. In the UK we’ll also get more data in the form of the November retail sales numbers while around midday the focus then turns over to the BoE MPC meeting outcome. No change in policy is expected there. Later on in the US the main highlight data wise will likely be the November inflation report. The market is expecting headline CPI to increase +0.2% mom and the core to also increase +0.2% mom, a view also shared by our US economists. Meanwhile, the latest weekly initial jobless claims data will be out alongside Empire manufacturing and the Philly Fed manufacturing reports for December. Lastly the NAHB housing market index reading will be out too. Away from the data, Japan PM Abe and Russia President Putin are scheduled to hold a meeting aimed at proposing economic cooperation between the two countries. The ECB will also publish the net take-up for TLTRO II. Finally EU leaders are also due to gather to discuss migration and security issues, as well as debate the Brexit process in Brussels this morning.


i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 22.85 POINTS OR 0.73%/ /Hang Sang closed DOWN 397.22  OR 1.77%. The Nikkei closed UP 20.80 OR 0.10%/Australia’s all ordinaires  CLOSED DOWN 0.79% /Chinese yuan (ONSHORE) closed DOWN at 6.9467/Oil FELL to 50.53 dollars per barrel for WTI and 53.61 for Brent. Stocks in Europe: ALL IN THE GREEN.  Offshore yuan trades  6.9351 yuan to the dollar vs 6.9467  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS AGAIN AS  MORE USA DOLLARS ATTEMPT TO  LEAVE CHINA’S SHORES /


none today



A very big story;  starting last night the Chinese bond market collapses as yield skyrocketed.  The onshore yuan collapsed as did the offshore.  The spreads narrowed as the POBC are desperate to keep dollars from leaving

(courtesy zero hedge)

China Halts Trading In Bond Futures After Record Bond Market Crash

Following yesterday’s violent selloff in bonds, which has continued today across the globe, one country that was particularly impacted was China, where as we reported overnight, Chinese government bond futures plunged by the most on record, dropping by 2% in the session, and erased in a week the gains of the past 18 months, hitting a 16 month high yield of 3.4%.

The crash happened just two weeks after we warned that as a result of the PBOC’s imprudent recent tightening of financial conditions, the central bank was practically begging for a bond market crash, one which Janet Yellen was happy to catalyze with the Fed’s rate hike and hawkish language. As the chart below shows, a crash is precisely what China got.

The crash, however, was just the start of China’s woes, because what happened next could spell far more headaches for a market that is now in a “bursting bubble” mode. As the WSJ reported this morning, Chinese authorities halted trading in key bond futures for the first time on Thursday, “as panicky investors sold the securities on concern that a long, credit-fueled bull market was coming to an end amid slowing growth, capital outflows and heightened government concern about asset bubbles.

After China’s 10-year Treasury bond future crashed by 2%, the biggest daily drop in history, exchange authorities had no choice but to suspend the securities to avert a selling panic. Trading resumed only after China’s central bank came to the rescue – as it always eventually does – injecting $22 billion into the short-term money market. The furious selloff, captured in the chart above, began in late November and has accelerated this week on concerns of capital outflows, a hawkish Fed and rising inflationary pressures.

As is widely known by now, China years of abundant, cheap credit have lead to a series of price bubbles in various asset classes from housing, to stocks, to commodities, to cars, to chickens, and now bonds. Many of these bubbles have burst dramatically over the last 18 months, with the crash in China’s stock markets last summer the most notable example.

However it was only last week, when on Thursday the pain spread to China’s $9 trillion bond market, which remains overwhelmingly driven by domestic investors, despite some opening up to foreigners this year. As we reported as the time, the yield on 10-year government bonds had reached a record low of 2.6% in August.

In an amusing comment shared by the WSJ, Hao Hong, co-head of research at Bocom International said that “People woke up to the fact that the bond bubble is too large. The bond market in China is under severe pressure, across the board.”

As was to be expected, and as this website warned in November, the Fed’s decision to raise interest rates helped trigger the selloff. Chinese investors believe it increases the chance China will guide its own rates higher to stem the yuan’s recent decline against the dollar and heavy capital outflows from the country. However, unlike other EMs, China has its own unique set of problems to deal with. The local bond market slump also exacerbates the policy dilemma facing China’s central bank which as we explicitly warned less than a month ago in “The Market’s Next Headache: China’s (Not So) Stealth Tightening” tightened short-term lending in recent weeks in an effort to make it harder for speculative investors to borrow money. The problem is that such tightening moves—along with any future rate rises—could provoke market plunges and panics as liquidity dries up.

“The Chinese bond bull market is over, as we have seen a turning point in money market rates this year,” said Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co., with $6 billion under management, referring to a tightening of liquidity in China that began this autumn and has recently gathered pace.

There was more.

As the WSJ adds, Thursday’s selling pressure was also driven by rumors spreading through the markets that a midsize Chinese brokerage had defaulted on a large bond payment, which it later denied. One of the country’s biggest fund managers, meanwhile, denied a rumor circulating on cellphone chat groups that it was facing large redemptions. Analysts said such rumors carried weight because many fund managers are heavily in debt, making them vulnerable to declining bond prices.

“The market is very sensitive to rumors now,” said Ke Congwei, a fixed-income analyst at Guosen Securities, based in Shenzhen.

Which is not good, because it means last night’s crash is just the start and will add to broader concerns about the Chinese economy, which grew at its slowest pace in more than 25 years in 2016, weighed down by a growing debt load and money-losing state-owned industries. Adding to China’s mysery is that the country has been grappling with large-scale capital outflows. The country has lost around $1.2 trillion of its foreign reserves, or around a quarter of its total, in the last two years as billionaires and average citizens transfer savings to the safety of overseas markets. To stem the outflows, authorities are using measures such as restricting overseas company acquisitions—transactions that could be fronts for spiriting money out of the country.

But the worst news is that in an economy driven entirely by cheap, abundant credit, at least until now, the consequences of the bursting of the bond bubble will only emerge in the coming weeks as China’s economy, all of which is vastly reliant and lubricated by said cheap credit, slows down dramatically, and which in turn will spillover to both the global economy and capital markets. The only question is when.





read carefully what Graham Summers states this morning:  Is China going to trigger a meltdown?

(courtesy Graham Summers/Phoenix Research capital)

Is China About to Trigger Another “August 2015”-Type Meltdown? Pt 2

Phoenix Capital Research's picture




Extremely important:

We know have the TIC data and again China along with other foreign central banks are rapidly get rid of their USA treasuries.  For China the reason is to avoid deflation/for others funds are needed to balance their deficits.

Up until last month, we have private buyers of these long treasuries.  However for the first time, this month these private buyers were sellers.

This is putting a huge strain on yields and is a huge factor in their rise.  Yellen may have think twice if she is going to raise rates:

(courtesy zero hedge)

China Dumps Treasuries: Foreign Central Banks Liquidate A Record $403 Billion In US Paper

One month ago, when we last looked at the Fed’s update of Treasuries held in custody, we noted something troubling: the number had continued to drop sharply, declining by another $14 billion in one week, and pushing the total amount of custodial paper to $2.788 trillion, the lowest since 2012. One month later, we refresh this chart and find that in last week’s update, there is finally some good news: foreign central banks finally bought some US paper held in the Fed’s custody account, which following months of liquidation, rose over the past two weeks by $23 billion, the biggest two-week advance since November of 2016, pushing the total amount of custodial paper to $2.816 trillion, the highest since early October.

That was the good news, and we use the term loosely in as much as the custody account can be used as a proxy of foreign buying, which according to most rates watchers, it can.

The bad news came out with the release of latest monthly Treasury International Capital data for the month of October, which showed that the troubling trend presented one month ago, has accelerated to an unprecedented degree.

Recall that in mid-November, we reported that in the latest 12 monthswe observed a record $375 billion in Treasury selling by foreign central banks in the period August 2015-September 2016, something unprecedented in size.

Fast forward to today when in the latest monthly update for the month of October, we find that what until a month ago was “merely” a record $375 billion in offshore central bank sales in the LTM period ending  September 30 has, one month later, risen to a new all time high $403 billion in Treasuries sold in the past 12 months.

As the chart below shows, there has never been such an aggressive selling of US Treasuries over a 12 month period in history.

The biggest seller, and keep in mind that TIC data is on a market-price adjusted basis, was once again was China, which in October “sold” a record $41 billion in US paper (the actual underlying number while different, as this particular series is adjusted for Mark to Market variations, will be similar), and a massive $125 billion in the last 4 months, bringing its total Treasury holdings to just $1.116 trillion, the lowest amount of US paper held by Beijing since 2010.

It wasn’t just China: Belgium, which has long been rumored to be the venue where China’s keeps its “secret” offshore Treasury holdings couretsy of Euroclear, also dumped its TSY holdings, and in October its stated holdings (which again have to be adjusted for MTM), tumbled from $143Bn to $117Bn, the lowest since the summer of 2015.

Furthermore, as we have shown previously, when superimposing China and Belgium’s holdings together, these tend to allign almost perfectly with the monthly change in Chinese reserves, which as reported before, have been declining sharply in recent months as a result of China’s aggressive attempts to prevent a sharp devaluation of the Yuan. This can be seen on the chart below, and confirms that at least when it comes to China, the reason for the selling of Treasurys has been due to reserve liquidation.

As we pointed out one month ago, what has become increasingly obvious is that both foreign central banks, sovereign wealth funds, reserve managers, and virtually every other official institution in possession of US paper, is liquidating their holdings at a disturbing pace, something which in light of the recent surge in yields to over 2 year highs, appears to have been a prudent move.

In some cases, like China, this is to offset devaluation pressure; in others such as Saudi Arabia and other petroleum exporting nations, it is to provide the funds needed to offset the drop in the petrodollar, and to backstop the country’s soaring budget deficit. In all cases, it may suggest concerns about a spike in future debt issuance by the US, especially now under the pro-fiscal stimulus Trump administration.

So who are they selling to? The answer, at least until August, was private demand, in other words just like in the stock market the retail investor is the final bagholder, so when it comes to US Treasuries, “private investors” both foreign and domestic are soaking up hundreds of billions in central bank holdings. As we said two months ago when we observed this great rotation in Treasuries out of official holders into private hands, “we wonder if they would [keep buying] knowing who is selling to them.” Well, last month this changed, and after private investors had been happily snapping up bonds for 4 straight months, in September “other foreign investors” sold a whopping $31 billion, bringing the total outflow between public and private foreign holdings to $76.6 billion, the second highest number on record. In October, while foreign official entities sold another $45 billion, at least the pace of selling by private entities moderated somewhat, to “only” $18.3 billion.

Meanwhile, while just four months ago yields had tumbled to near all time lows, suddenly the picture is inverted, and long-yields are surging on concerns that not only will the ECB and the BOJ soon taper their purchases of the long end, but that Donald Trump is about to unleash a $1 trillion debt tsunami at a time when the Fed will not be available to monetize it, now that the Fed is again hiking rates.

While it is unclear under what conditions foreign buyers may come back – after all TSY rates have already jumped high enough to where US paper should be more than attractive to foreign official institutions – one thing is clear: as of this moment the selling strike not only continues but is accelerating, and should the foreign liquidation of Treasuries fail to slow, Yellen will soon have to plan how to not only abort the current rate experiment which continues to pressure yields higher around the globe, but to start thinking how to launch QE4 instead.



Next stop parity as the Euro crashes into the 103 column:

(courtesy zero hedge)

Euro Crashes To 1.03 Handle For First Time Since 2003

Parity here we come…

EURUSD touched 1.0394 as Europe closed… the weakest against the dollar since January 2003


German two year bond yield plummets to its nadir as their is a panic bid for collateral in Europe with dollar in scarce supply:

(courtesy zero hedge)



Panic Bid For Collateral Sends German 2Y Yield To New Record Low

Another day, another mad dash for German 2Y Bunds in a continent deprived of collateral.

As we noted yesterday, when 2Y Bunds dropped to a fresh all time low, the ECB had failed in its bid to fix the European repo market by expanding the eligible universe of collateral to include €50 billion in cash at its meeting one week ago.

Today, it’s more of the same, and as longer yields continue to rise around the globe, and Germany as well, the short-end is a different story, with the panic bid for the German short end hiting record levels, and moments ago pushing the yield on the 2Y to a new all time low of -0.78%.

At this point it is safe to say that some is very structurally broken with the European bond market, but what is scarier is that the ECB thought its stopgap measure unveiled last week would fix it. That it failed to do that merely shows that even the ECB has virtually no understanding of what is going on in Europe’s bond market.


This is getting scary!  The USA now states that Vladimir Putin was personally involved in the election hacking:

(courtesy zero hedge)


US Accuses Vladimir Putin Of “Personal Involvement” In Election Hack

And just like that the narrative of Russia hacking the presidential election has escalated to the highest possible level, and has officially jumped the shark.

Moments ago, following a month-long barrage of unsubstantiated stories in the press accusing the Russian government of indirectly hacking the US presidential election, which culminated with last night’s 8,000 word NYT expose, and which followed a schism between the FBI and CIA, in which the former disputed the latter’s “fuzzy and ambiguous” claims that Russia sought to influence the presidential elections, moments ago the NBC News reported that U.S. intelligence officials believe with “a high level of confidence” that Russian President Vladimir Putin became personally involved in the covert Russian campaign to interfere in the U.S. presidential election.

Perhaps because the official narrative has so far been unable to gather traction with the previous “shotgun approach” in which just “Russia” was accused of handing the election to Trump, four short days before the Electoral College vote, the narrative has changed and it now involves the very pinnacle of Russia’s government: the president himself.

Citing two senior officials with direct access to the information, NBC reports that “new intelligence shows that Putin personally directed how hacked material from Democrats was leaked and otherwise used. The intelligence came from diplomatic sources and spies working for U.S. allies, the officials said.

So why did Putin hack a few million rust belt Americans into believing that their lives under Obama, and by extension Hillary, were bad enough that they demanded a change? NBC provides the following spoonfed logic:

Putin’s objectives were multifaceted, a high-level intelligence source told NBC News. What began as a “vendetta” against Hillary Clinton morphed into an effort to show corruption in American politics and to “split off key American allies by creating the image that [other countries] couldn’t depend on the U.S. to be a credible global leader anymore,” the official said.

Ultimately, the CIA has assessed, “the Russian government wanted to elect Donald Trump.”

And this is where the latest turn in the story falls apart, because even NBC – which will blast this report on prime time TV to all America – admits “the FBI and other agencies don’t fully endorse that view“, but it adds “few officials would dispute that the Russian operation was intended to harm Clinton’s candidacy by leaking embarrassing emails about Democrats.”

One can call them embarrassing emails, others see in the 50,000 emails released by Wikileaks much needed insight into the corruption of the Clinton team, not to mention the DNC; after all the only reason we know that the Democratic Party rigged the elections against Bernie Sanders (and cost the job of Debbie Wasserman Shultz) is because of those emails. Emails which, incidentally, Wikileaks has repeatedly denied originated from Russia, but as we said yesterday, it’s Julian Assange’s word against that of the US government.

Sadly, the other disclosures in the NBC report fail to tell us something we don’t already know. Like, for example, providing actual evidence – that long awaited, missing link that would in fact confirm Russia is behind the hacking.

The latest intelligence said to show Putin’s involvement goes much further than the information the U.S. was relying on in October, when all 17 intelligence agencies signed onto a statement attributing the Democratic National Committee hack to Russia.


The statement said officials believed that “only Russia’s senior-most officials could have authorized these activities.” That was an intelligence judgment based on an understanding of the Russian system of government, which Putin controls with absolute authority.

Because who needs evidence when judgment is enough, especially when the potential downside is a massive diplomatic scandal.

It gets better: “Now the U.S has solid information tying Putin to the operation, the intelligence officials say. Their use of the term “high confidence” implies that the intelligence is nearly incontrovertible.”

What is this incontrovertible intelligence? It appears to be personal opinions of Putin the “despot.”

“It is most certainly consistent with the Putin that I have watched and used to work with when I was an ambassador and in the government,” said Michael McFaul, who was ambassador to Russia from 2012 to 2014.


“He has had a vendetta against Hillary Clinton, that has been known for a long time because of what she said about his elections back in the parliamentary elections of 2011. He wants to discredit American democracy and make us weaker in terms of leading the liberal democratic order. And most certainly he likes President-elect Trump’s views on Russia,” McFaul added. Clinton cast doubt on the integrity of Russia’s elections.

What is the US response? “As part of contingency planning for potential retaliation against Russia, according to officials, U.S. intelligence agencies have stepped up their probing into his personal financial empire.

In other words, it appears that as punishment for Clinton losing the election, the US could actively crackdown on Putin’s financial assets held anywhere around the globe:

American officials have concluded that Putin’s network controls some $85 billion worth of assets, officials told NBC News. 


A former CIA official who worked on Russia told NBC News that it’s not clear the U.S. can embarrass Putin, given that many Russians are already familiar with allegations he has grown rich through corruption and has ordered the killings of political adversaries.  But a currently serving U.S. intelligence official said that there are things Putin is sensitive about, including anything that makes him seem weak.

While we are confident that Putin has taken countermeasures against precisely this kind of contingency, what is scariest is the NBC report’s conclusion:

“The former CIA official said the Obama administration may feel compelled to respond before it leaves office. “This whole thing has heated up so much,” he said. “I can very easily see them saying, `We can’t just say wow, this was terrible and there’s nothing we can do.'”

Well, if Obama is truly getting involved, he has 4 days in which to turn 37 Republican electors against Trump. As for the potential fallout, which may include various forms of social conflict should the Trump victory be overturned in the 11th hour at the Electoral College, then Putin will truly win as a result of what may then follow.





as we discussed yesterday, the emerging markets will have a terrible time with the rise in USA rates.  Last night the central bank of Mexico rates it’s overnight rate by 50 basis points to 5.75% trying to stem the losses on the peso

(courtesy zero hedge)

Mexican Central Bank Hikes Overnight Rate To 5.75%, More Than Expected: Peso Spikes

While the US secular stagnation theme was all the rage, until some time in October, the rest of the world couldn’t cut rate fast enough. However, now that things are flipped courtesy of a suddenly hawkish Fed which as per yesterday’s FOMC announcement realized it is behind the curve on both inflation, and the potential Trump Fiscal Stimulus, everything has flipped, and shortly after every Arab Gulf nation hiked rates overnight in sympathy with the Fed to keep their pegged currencies level, moments ago Banco de Mexico surprised market watchers who had expected a mere 25 bps hike from 5.25% to 5.50% in the overnight rate, by doubling the tightening, and setting the overnight rate at 5.75%.


The immediate result has been a spike in the Mexican Peso, which is trying to offset all the losses suffered after the Fed announcement.

Keep an eye on the currency, however, because if history serves, the last time Mexico hiked the kneejerk reaction was quickly faded and the peso ended weaker on the day.




As promised crude is heading southbound because of the non deal and increase production from Libya et al.

(courtesy zero hedge)

WTI Crude Tumbles To $49 Handle, Erases OPEC/NOPEC Deal Gains

But, but, but… growth, and inflation, and supply cuts, and growth again…

Well that de-escalated quickly…


As Libya restarts exports and The Fed sends the dollar soaring so WTI crude prices just broke back to a $49 handle for the first time since Dec 8th.

“The OPEC cuts are going to prevent some of the mega-glut,” said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland. “But Libya coming back is not going to help the supply imbalances. It’s going to take a little longer for the OPEC cuts to work. It’s relatively clear OPEC are not going to get to 32.5 million barrels a day in January.”



none today

Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings THURSDAY morning 10:00 am



GBP/USA 1.2412 DOWN .0121 (Brexit by March 201/UK government loses case/parliament must vote)


Early THIS THURSDAY morning in Europe, the Euro FELL by 93 basis points, trading now WELL BELOW the important 1.08 level RISING to 1.0643; Europe is still reacting to Gr Britain BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA / Last night the Shanghai composite CLOSED DOWN 22.85 0r 0.73%     / Hang Sang  CLOSED DOWN 392.22 POINTS OR 1.77%   /AUSTRALIA IS LOWER BY 0.79% / EUROPEAN BOURSES ALL IN THE GREEN 

We are seeing that the 3 major global carry trades are being unwound. The BIGGY is the first one;

1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies and especially with the fall of the yuan carry trade. The emerging market which house close to 50% of the 9 trillion dollar short is feeling the massive pain as their debt is quite unmanageable.

2, the Nikkei average vs gold carry trade ( NIKKEI blowing up and the yen carry trade HAS BLOWN up/and now NIRP)

3. Short Swiss franc/long assets blew up ( Eastern European housing/Nikkei etc.

These massive carry trades are terribly offside as they are being unwound. It is causing global deflation ( we are at debt saturation already) as the world reacts to lack of demand and a scarcity of debt collateral. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>

The NIKKEI: this THURSDAY morning CLOSED UP 20.18 POINTS OR 0.10%

Trading from Europe and Asia:
1. Europe stocks ALL IN THE GREEN 

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 397.22 OR 1.77%   Shanghai CLOSED DOWN 22.85 POINTS OR 0.73%   / Australia BOURSE IN THE RED /Nikkei (Japan)CLOSED UP 20.18 POINTS OR 0.10%INDIA’S SENSEX IN THE RED

Gold very early morning trading: $1128.00


Early THURSDAY morning USA 10 year bond yield: 2.60% !!! UP 13 IN POINTS from WEDNESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.18, UP 5 IN BASIS POINTS  from WEDNESDAY night.

USA dollar index early THURSDAY morning: 103.14 UP 90 CENT(S) from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING


And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield: 3.774% DOWN 1/ 2  in basis point yield from WEDNESDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.09% UP  3  in   basis point yield from  WEDNESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.42%  UP  2  IN basis point yield from  WEDNESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.826  UP 3  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 40 points HIGHER than Spain.






Euro/USA 1.0399 DOWN .01128 (Euro DOWN 112 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 117.93 UP: 0.740(Yen DOWN 74 basis points/ 

Great Britain/USA 1.2421 DOWN 0.01121( POUND DOWN 112 basis points)

USA/Canada 1.3363 UP 0.0075(Canadian dollar DOWN 75 basis points AS OIL FELL TO $51.25


This afternoon, the Euro was DOWN by 112 basis points to trade at 1.0399


The POUND FELL 112 basis points, trading at 1.2421/

The Canadian dollar FELL by 74 basis points to 1.3363,  AS WTI OIL FELL TO :  $51.25

The USA/Yuan closed at 6.9409
the 10 yr Japanese bond yield closed at +.09% UP 1 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 10   IN basis points from WEDNESDAY at 2.575% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.127 DOWN 1  in basis points on the day /

Your closing USA dollar index, 103.23 UP 103 CENTS  ON THE DAY/1.00 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for THURSDAY: 1:30 PM EST


London:  CLOSED UP 49.82 POINTS OR 0.72%
German Dax :CLOSED UP 121.56 POINTS OR 1.08%
Paris Cac  CLOSED UP 49.99 OR 1.08%
Spain IBEX CLOSED UP 122.4 POINTS OR 1.33%
Italian MIB: CLOSED UP 388.47 POINTS OR 2.09%

The Dow was UP  59.71 POINTS OR .30% 4 PM EST

WTI Oil price;  51.25 at 1:00 pm; 

Brent Oil: 54.153   1:00 EST






This ends the stock indices, oil price, currency crosses and interest rate closes for today

Closing Price for Oil, 5 pm/and 10 year USA interest rate:


BRENT: $54.20


USA 30 YR BOND YIELD: 3.165%



USA/JAPANESE YEN:118.17  UP 0.974

USA DOLLAR INDEX: 103.11 UP 88  cents(BREAKS HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2418./ DOWN 118  BASIS POINTS.

German 10 yr bond yield at 5 pm: +.365%




And now your more important USA stories which will influence the price of gold/silver


Dip-Buyers Bid Banks & Long Bonds But Batter Barbarous Relics

The unseen message…


Two words: “Policy Error”?

The yield curve is not supposed to collapse when The Fed is pitching higher rates, growthier growth, and fiscal stimulus hype!!


And inflation expectations have gone nowhere since the initial kneejerk and have now fallen since The Fed…


It’s all starting to get just a little silly…


Everything is red post-Fed…


Futures show the ramp efforts, fail then ramp again…


Bank stocks (and healthcare) caught a bid but everything else remains red post-Fed…


A Collapsing yield curve seems not to matter to banks…


And someone is buying Goldman stock despite professionals having no interest at all in Goldman credit…


Another Day, Another VIX-STOCKS_PERFECT CORRELATION DAY… Also note Lower-High for Dow…

REMEMBER – Tomorrow is Quad Witch.


Treasury yields were very mixed today with the long-bond well bid and belly dumped to flatten the curve dramatically… 30Y now unch from Fed!


The USD soared once again… (with Yen and Euro weakness)


EURUSD crashes to 2003 lows…


But the peso rallied post-Banxico surprise hike…


While dollar strength hit all commodities… (but copper seemed to hold on, as perhaps Yuan weakness helped a little?)


Pushing WTI below $50…


It was Gold and SIlver that were clubbed like a baby seal…



Faulty data:

(courtesy zerohedge)

US Manufacturing PMI Hits 21-Month High (Despite Plunge In Industrial Production)

More faulty data:

(courtesy zero hedge)

Philly, Empire Feds Smash Expectations On Soaring Optimism Despite Deterioration Labor Conditions, Inflation Spike

There is seemingly no stopping the runaway train that is the economic momentum of the past month, as confirmed by the just released Philly and Empire Fed surveys, which printed at 21.5 and 9.0, smashing expectations of 9.1 and 4 respectively, in fact printing above the highest estimate for both reports, and well above the recent print of 7.6 and 1.5. The one blemish was the sharp drop in labor market conditions at the Empire Fed, which saw a big drop in both employment and hours worked.

First, looking at the Empire Fed, which jumped from 1.5 to 9, we get the following component data:

  • Prices paid rose to 22.6 vs 15.5
  • New orders rose to 11.4 vs 3.1
  • Number of employees fell to -12.2 vs -10.9
  • Work hours rose to -7 vs -10.9
  • Inventory rose to -13.9 vs -23.6

* * *

The Philly Fed, which soared even more from 7.6 to 21.5, was even more impressive:

  • Dec. prices paid rose to 29.4 vs 27.5
  • New orders fell to 13.9 vs 18.6
  • Employment rose to 6.4 vs -2.6
  • Shipments rose to 22.0 vs 19.5
  • Delivery time rose to 7.6 vs 6.1
  • Inventories fell to 1.1 vs 13.4
  • Prices received fell to 5.8 vs 16.0
  • Unfilled orders rose to 5.7 vs 4.1
  • Average workweek rose to 9.8 vs 7.4

The commentary on the Empire Fed was optimistic with the exception of the labor market which remained weak:

Business activity grew modestly in New York State, according to firms responding to the December 2016 Empire State Manufacturing Survey. The headline general business conditions index climbed eight points to 9.0. The new orders index rose to 11.4, and the shipments index was unchanged at 8.5. Labor market conditions remained weak, with manufacturers reporting declines in employment and hours worked. Inventories continued to fall, and delivery times shortened. The prices paid index rose seven points, pointing to a pickup in input price increases, while the prices received index showed only a slight increase in selling prices. Indexes for the six-month outlook conveyed a high degree of optimism about future conditions, with the index for future business conditions rising to its highest level in  nearly five years.


Business Activity Picks Up


Manufacturing firms in New York State reported that business activity expanded in December. The general business conditions index rose eight points to 9.0, its highest level since April. Thirty-two percent of respondents reported that conditions had improved over the month, while 23 percent reported that conditions had worsened. The new orders index climbed eight points to 11.4, indicating that orders increased at a solid clip, and the shipments index held steady at 8.5, pointing to an ongoing increase in shipments. The unfilled orders index edged two points higher to -10.4, and at -7.8, the delivery time index signaled shorter delivery times. The inventories index remained negative, indicating that inventory levels continued to fall, though at a slower pace than last month.

As noted above, labor market conditions remained weak: as in November, both employment indexes remained negative in December. The index for number of employees was little changed at -12.2, a sign that employment levels continued to wane, and the average workweek index, at -7.0, pointed to a decline in hours worked. The prices paid index rose seven points to 22.6, indicating that input price  increases accelerated, and the prices received index held steady at 3.5, signaling another small increase in selling prices this month.

That, however, did not dent optimism as Indexes for the six-month outlook strengthened, and suggested that respondents were very optimistic about future conditions. The index for future business conditions shot up twenty points to 50.2, its highest level in nearly five years, with 61 percent of respondents expecting conditions to improve in the months ahead. The index for future new orders climbed eighteen points to 46.7, and the index for future shipments increased fourteen points to 40.1. The index for future employment indicated that firms expected to expand employment significantly. The capital expenditures index climbed nine points to 21.7, and the technology spending index rose four points to 12.2.

* * *

At the Philly Fed it was not so much labor contraction, as a spike in inflation that was the concern. As the report notes, the index for current manufacturing activity in the region increased from a reading of 7.6 in November to 21.5 this month.

Nearly 34 percent of the firms reported increases in activity this month, compared with 24 percent last month. The general activity index has remained positive for five consecutive months, and the activity index reading was the highest since November 2014 . The current new orders and shipments indexes remained positive, reflecting continued growth. The shipments index increased 3 points, while the new orders index fell 5 points. Both the delivery times and unfilled orders indexes were positive for the second consecutive month, suggesting longer delivery times and an increase in unfilled orders.


Firms reported an increase in manufacturing employment and work hours this month. The percentage of firms reporting an increase in employment (17 percent) exceeded the percentage reporting a decrease (11 percent). The current employment index improved 9 points, its first positive reading in 12 months. Firms also reported an increase in work hours this month: The average workweek index, which increased 2 points, has now been positive for two consecutive months.

There was one troubling issue: a sharp jump in cost pressures, i.e., inflation  as firms reported increases in the prices paid for inputs. The prices paid index increased 2 points following a 21 point increase last month. Thirty percent of the firms reported higher input prices this month. Most firms (66 percent), however, reported that input prices were unchanged. With respect to prices received for firms’ own manufactured goods, the percentage of firms reporting higher prices (16 percent) remained higher than the percentage reporting lower prices (10 percent), but the index for current prices received fell 10 points.

Like with the Empire Fed, optimism in Philadelphia also soared. The diffusion index for future general activity increased from a reading of 29.3 in November to 52.6 this month. The index is now at its highest reading since January 2015. Nearly 58 percent of the firms now expect increases in activity over the next six months, compared with 36 percent last month. Indexes for future new orders and shipments also showed notable improvement this month, increasing 14 points and 22 points, respectively. In addition, firms marked up their forecasts for employment increases. The future employment diffusion index increased 16 points. Almost 35 percent of the firms expect increases in employment over the next six months, up from 25 percent in November. A notable share of firms (43 percent) indicated that they will increase capital spending over the next six months, and the future capital spending diffusion index increased 15 points.

In Summary, the Philly Business Outlook Survey suggest a pickup in growth for the region’s manufacturing sector. The indexes for general activity, new orders, shipments, and employment all indicated expansion this month. Firms reported an increase in input price pressures over the past two months, but price increases for manufacturers’ own goods were modest in December. Firms’ optimism about future manufacturing growth improved markedly this month. Firms were much more optimistic about future employment as well as capital spending over the first half of next year.

* * *

Overall, very strong reports and if anything very bearish for markets, as they both hint that as Yellen as warned, the economy may be running at potential, which means that any incremental stimulus will require a matching monetary policy tightening which will promptly hits risk assets.




An absolute joke:  the Fed raises rates, interest rates are soaring, mortgage rates are exploding northbound mortgage applications collapsed and homebuilder confidence explodes higher?

(courtesy zero hedge)


Dow Soars Above 19,900 On Dramatic Spike In Homebuilder Confidence

Are you f##king kidding me? The Fed hikes rates, interest rates are soaring, mortgage rates are exploding, and mortgage apps have collapsed to ‘Lehman’ lows… and Homebuilder Confidence explodes to its highest since 2005 – just before it utterly collapsed. Of course this was just what the market wanted and The Dow was panic-bid back above 19,900…

This is happening…


And self-referential homebuilders are the most optimistic since the crest of the last cycle before it collapsed…

“This notable rise in builder sentiment is largely attributable to a post-election bounce, as builders are hopeful that President-elect Trump will follow through on his pledge to cut burdensome regulations that are harming small businesses and housing affordability,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill.


“This is particularly important, given that a recent NAHB study shows that regulatory costs for home building have increased 29 percent in the past five years.”

Ignore that cliff…


Which sent The Dow to unchanged from The Fed…

Now those stops have been run, what happens?

(courtesy zero hedge)

“Bullet In The Mouth” – Trump Electors Flooded With Death Threats

Electors around the country are being harassed with a barrage of emails, phone calls, letters and even death threats, in an effort to block Donald Trump from being voted in as president by the Electoral College on Monday.  Of course, with the mainstream media and democrats pushing the dangerous narrative that Putin basically usurped our democracy, it’s no wonder that disaffected Hillary snowflakes are growing more “triggered” with each passing day.

According to a report from the New York Post, one Republican elector in Michigan has even received death threats after he refused to change his vote.

For Michael Banerian, a senior at Oakland University in Michigan and a Republican elector, the harassment comes with a dark side.


He said he’s been getting death threats via email, snail mail, Twitter and Facebook.


“Somebody threatened to put a bullet in the back of my mouth,” Banerian, 22, told The Post on Wednesday.

Republican electors from all over the country are being inundated with emails, phone calls and letters on a daily basis, from angry democrats, urging them to switch their votes.  One Republican elector in Arizona estimated that she had received 50,000 emails since election day.

The bullying is overwhelming Sharon Geise’s tech devices, but not her resolve to support Trump.


The Mesa, Arizona, grandmother woke up Wednesday morning to more than 1,500 emails demanding she not carry out her legal duty to vote for the president-elect.


“They just keep coming and coming,” Geise told The Post, estimating she’s received more than 50,000 emails since the election. “They’re overpowering my iPad.”


Her answer: mass delete.


Despite the avalanche, she said, her decision to back Trump is stronger than ever.


“Obviously their minds are made up and they’re not going to change. I’m not either,” the soft-spoken Geise said.

Hillary meme


Meanwhile, a Republican elector in Tennessee confirmed that she received an unsolicited call from Harvard Professor Larry Lessig’s group offering “free legal advice” to electors willing to change their vote (we noted this effort yesterday, see: “Harvard Professor Says He’s Rallied Nearly Enough GOP Electors To Block Trump“)…an offer which she said “borders on bribery.”

Like Geise, Republican Patricia Allen of Tennessee told The Post she’s been bombarded with 2,000 emails, 120 letters and five phone calls all urging her to switch and vote against Trump. But Allen, 74, said that despite the “siege,” she’s not budging.


“This has never happened before … Do you know how long it takes to delete all those emails every day?” she asked.


She’s also been solicited by a Harvard University group backed by constitutional law Prof. Lawrence Lessig, who has offered free legal aid to electors who change their vote.


“That borders on bribery,” said Allen. “Carried to this extreme, the day might come when an elector could be sold to the highest bidder.”

It’s simply amazing that more than a month has passed since election day and disaffected Hillary supporters still can’t come to terms with the fact that, to quote Joe Scarborough, “Hillary Clinton lost Hillary Clinton the election.”

PUtin Meme

(courtesy zero hedge)

Clinton Investigation Back On: FBI Agents In NY Ordered To Continue Foundation Probe

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