Yet More Trouble in Bond Land

While everyone else is fixated on the U.S. stock market, I’m watching something more important…credit markets…because that’s where the next big thing is coming from.

Over the last week, another of those issues that no one seems to care about has worsened: the bloodbath in Chinese bonds. Last night, futures plunged back to last week’s lows overnight amid liquidity fears (with short-term lending rates inverting, rising above longer rates) and growing anxiety over China’s unprecedented debt load.

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Italian Banks: No Fix in Sight

So, Renzi lost his referendum on Sunday, he resigned as Prime Minister and his government is in limbo. The often-delayed private capital refinancing of Italy’s most troubled large bank, Monti di Paschi, has apparently gone into limbo as well. Surely the European banking system was crushed yesterday in the stock market and the euro was pummelled while the dollar soared? None of the above, dear reader. But be patient.

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More of the Same

I have just finished reading an economist’s projection of 5% real growth in the U.S. economy for next year. Amazing. The optimism stems from a belief that a new administration will be able to dramatically (and immediately) increase economic growth. The problem is that the U.S. and global economy continue to face major structural issues—too much debt, an aging population, declining productivity and a slowing global economy–that are beyond the control of any politician.

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