Treasuries Auction

The recent US 10 year treasury note auction of $27B saw a tepid response with bid cover ratio of 2.17, the lowest in a decade. 2.17 figure here corresponds to the demand for the treasuries i.e. there was 2.17 times demand for them. US debt has ballooned to 22T with 3.9T sitting on the FED balance sheet. The US will have to be very careful with it’s budget deficit going forward taking due diligence of law of economics into consideration. The 10 year yield at 2.49 is on par with yields on a 6 month Treasury bill at 2.45 highlights further concerns of investors. US Treasuries are still the safest haven for investors but it seems soon investors might start looking at commodities like Gold as a replacement for safe investing. Euro is structurally flawed although Scandinavian debt would look good as an asset class diversification. Financing has been a major hurdle for building infrastructure projects and this article will be expanded soon. Like Pulp Fiction movie, all dots will connect at the end of this rapidly building interesting article.

HIIT: Strength, Endurance and Rajesh

High-Intensity Interval Training (HIIT) is one of the best ways to build strength and endurance. It works on core functional exercises, which are performed with  great intensity with very small intervals of rest in between different exercises and sets. I have been doing weight training for a while and tried various techniques to build strength and  endurance. I spoke with Rajesh, a top HIIT, strength and fitness trainer at RAAW gym in Pune. Rajesh recently won the Lift For India (an event dedicated to families of victims of Pulwama terror attack) held at Recomp gym. I had also participated in the competition and posted my videos here. Rajesh is known for strength, endurance and power. His best one rep in Squats is 200 kg i.e. 440 lbs.

Rajesh has won numerous fitness events at the national and state level and is a promising power lifter. He was kind enough to share time with me and recommended a few exercises for strengthening core and endurance. I prefer to record my videos impromptu for on the road feel. Thankful to RAAW management for their support in shooting the video and deeply grateful to Rajesh. I would be soon releasing my video as well. Its time to put a video face to the blog. Lot more exclusive work is coming soon. If you like the video, please subscribe to the You Tube channel.

Balance Sheet Normalization Principles and Plans

The core inflation rate is low at 1.6% missing the target of 2% with federal fund rate hovering around 2.5%. Hopefully, as Mr. Powell discussed, low inflation number is temporary. The Fed balance sheet is down to $3.9T and has both Mortgage Backed Securities and Treasuries. The low inflation is worrisome since the US economy is in top gear. Unemployment at the lowest levels with one of the highest wage growth in recent years, low core inflation (excluding energy and food prices) smells trouble.

Inflation is of two types: the supply side and the demand side. Printing excess money did not yield in much inflation and we will have to wait and see the next quarter for the demand side effect to structure out. Monthly treasury securities reduction is down to $15B from $30B from this month. With low inflation, pruning security reduction makes sense although according to experts treasury security reduction did not cause liquidity crunch. FED is right in waiting for another quarter to understand the direction of inflation for a more decisive action.  

Attaching the link to the balance sheet normalization plan of the FED.

Implementation Note Issued May 1, 2019

Joe Biden, 2020 and Pittsburgh

My man Joe Biden recently kick started his Presidential bid campaign for 2020 with his first rally at Pittsburgh. I am impressed by his presidential campaign and it looks a lot of thought process has gone behind it. Guess which city in the US has been prominently highlighted on my blog. Of course Pittsburgh.

Coming up a special feature on the infrastructure story in the US. This month there would be a lot of vibrancy here. So stay tuned.

I had mentioned about the duration of bonds in my earlier article since I had read a report highlighting the duration of some US sovereign bonds to be 7. (Citation Needed). Duration is nothing but price sensitivity of bonds to interest rates. More on this at a later date.


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