I can’t come close to Doug Noland’s CBB depth of coverage of markets.

Credit Bubble Bulletin Summary

I urge you to sign up to this newsletter/blog. It’s free and wonderful. creditbubblebulletin.blogspot.com. It’s worth the price of a Bloomberg.

For the Week:

The S&P500 gained 1.7% (up 1.2% y-t-d), while the Dow slipped 0.2% (down 7.4%). The Utilities increased 0.9% (down 4.6%). The Banks fell 1.4% (down 34.3%), and the Broker/Dealers dropped 1.5% (down 4.1%). The Transports jumped 2.7% (down 8.3%). The S&P 400 Midcaps rose 0.8% (down 9.7%), and the small cap Russell 2000 gained 0.9% (down 11.3%). The Nasdaq100 advanced 4.0% (up 24.9%). The Semiconductors surged 4.8% (up 15.5%). The Biotechs fell 1.9% (up 11.6%). With bullion surging $74, the HUI gold index gained 2.7% (up 45.0%).

Three-month Treasury bill rates ended the week at 0.0825%. Two-year government yields fell four bps to 0.11% (down 146bps y-t-d). Five-year T-note yields dropped seven bps to 0.21% (down 149bps). Ten-year Treasury yields fell six bps to 0.53% (down 139bps). Long bond yields declined four bps to 1.19% (down 120bps). Benchmark Fannie Mae MBS yields sank 18 bps to 1.24% (down 147bps).

Greek 10-year yields increased three bps to 1.08% (down 35bps y-t-d). Ten-year Portuguese yields declined a basis point to 0.35% (down 9bps). Italian 10-year yields rose two bps to 1.01% (down 40bps). Spain’s 10-year yields slipped one basis point to 0.34% (down 13bps). German bund yields dropped eight bps to negative 0.52% (down 34bps). French yields fell five bps to negative 0.19% (down 31bps). The French to German 10-year bond spread widened three to 33 bps. U.K. 10-year gilt yields declined four bps to 0.10% (down 72bps). U.K.’s FTSE equities index sank 3.7% (down 21.8%).

Japan’s Nikkei Equities Index dropped 4.6% (down 7.1% y-t-d). Japanese 10-year “JGB” yields were little changed at 0.02% (up 3bps y-t-d). France’s CAC40 lost 3.5% (down 20.0%). The German DAX equities index fell 4.1% (down 7.1%). Spain’s IBEX 35 equities index sank 5.7% (down 28.0%). Italy’s FTSE MIB index dropped 4.9% (down 18.8%). EM equities were mixed. Brazil’s Bovespa index increased 0.5% (down 11.0%), while Mexico’s Bolsa declined 0.9% (down 15.0%). South Korea’s Kospi index rose 2.2% (up 2.4%). India’s Sensex equities index fell 1.4% (down 8.8%). China’s Shanghai Exchange jumped 3.5% (up 8.5%). Turkey’s Borsa Istanbul National 100 index dropped 5.4% (unchanged). Russia’s MICEX equities index rose 1.7% (down 4.4%).

Investment-grade bond funds saw inflows of $7.904 billion, and junk bond funds posted positive flows of $295 million (from Lipper).

Freddie Mac 30-year fixed mortgage rates declined two bps to 2.99% (down 76bps y-o-y). Fifteen-year rates fell three bps to 2.51% (down 69bps). Five-year hybrid ARM rates sank 15 bps to 2.94% (down 52bps). Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates down six bps to 3.12% (down 92bps).

Federal Reserve Credit last week added $4.4bn to $6.917 TN, with a 47-week gain of $3.195 TN. Over the past year, Fed Credit expanded $3.165 TN, or 84.4%. Fed Credit inflated $4.106 Trillion, or 146%, over the past 403 weeks. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt gained $5.1 billion last week to $3.407 TN. “Custody holdings” were down $55.5bn, or 1.6%, y-o-y.

M2 (narrow) “money” supply fell $70.2bn last week to $18.318 TN, with an unprecedented 21-week gain of $2.811 TN. “Narrow money” surged $3.448 TN, or 23.2%, over the past year. For the week, Currency increased $6.5bn. Total Checkable Deposits jumped $55.9bn, while Savings Deposits slumped $113.9bn. Small Time Deposits declined $6.9bn. Retail Money Funds fell $11.9bn.

Total money market fund assets declined $18.3bn to $4.570 TN. Total money funds surged $1.292 TN y-o-y, or 39.4%.

Total Commercial Paper slipped $1.6bn to $1.019 TN. CP was down $133bn, or 11.5% year-over-year.

My thoughts

Turkey seems to be heading in the direction of hyperinflation. A country on the borders of Europe being in such a terrible place is not going to play out well. The EU has paid Turkey to keep a lot of refugees within its borders, to save us giving them asylum, I’m not sure that’s going to be sustainable. In real