The Wall Street Journal said recently that the full European bank stress test report would be released on July 23…that would be July 22nd overnight for us.
I read that up to 1/3 of the European banks may fail the stress test, according to one analyst familiar with the banks and the test criteria.
Also, here is something I didn’t consider before, but one of the interviewees this morning on CNBC (a Fifth Third Bank pro) said that the reason our treasury yields have dropped has to do with the European banks buying up US treasuries to “window dress” their bank depositis….and once the stress testing is done, we should expect treasury yields to fly higher when the banks sell that paper back into the markets!
Furthermore, there was news today that China’s central bank bought fewer US treasuries the past month…about 4% less, which is a substantial change for them. So, Europe made up the difference, but what happens when the European banks begin selling? Can the Fed step in and continue to buy treasuries when the rest of the world won’t? Does this put the US currency at great risk?
For now, you would not know it…gold was selling off steeply again today, but it may be manipulation by gold traders in New York…and such manipulation may soon be over-run with panic buying? I don’t know, but be prepared for such a scenario…I’m sure the Fed will do its best to prevent such a “run on the currency.”
I may do a new round of TBT call buying next week since it proved quite profitable for my followers and I last week… but probably not until mid-week, when I think the yields may bottom around 2.85% on the 10 year.