America Thirst: China’s Flows Worrying – Art Cashin

Just before the close, Art Cashin, one of the best out there, cited the weak Treasury auctions and, ergo, worries China is pulling back on its Treasury purchases is one factor is behind the ugly stock sell-off.

Recall,  no FED participation in the auctions this month, and primary dealers took down a disproportionate share of this week’s auctions.  The auctions ranged in size, from 12 to 42 percent larger relative to October 2017 in each maturity.

That is the Treasury financing needs due to larger budget deficits and quantitative tightening are growing rapidly.   The free money from central banks, and China and Japan,  is over.

Nationalism can be a real bitch.

Hope you have been reading the Global Macro Monitor over the past month, folks.   We gave you the heads up here:

The Gathering Storm In The Treasury Market 2.0
Free Ride Is Over: China & Japan Bailing On Treasuries

Central banks and foreigners have accumulated almost 75 percent of the  stock of marketable notes and bonds.  That liquidity is/has  dried up,  folks.   America First soon to be America Thirst?

The budget mess is also starting to get loopy.  That is higher interest rates = higher interest payments = higher deficits = higher borrowing requirements = higher interest rates…  Wash, rinse, repeat.    Yes, Mr. Vice President, deficits do matter when they have to be financed by normal means.

The free ride is over, Edgar, and winter is coming.  –  GMM, Oct 17th

We should be out in the next few days with some barn burning and eye opening data.