- the dollar drifts overnight
- reissuing bonds at higher rates..
Good Day… And a Wonderful Wednesday to you! Well, this is it, for a while… I start my traditional Spring Training Vacation next week, and since I’ll be at the hospital for my infusion tomorrow morning, that means no Pfennig on Thursday, and then we’re into next week, so this is it… I need this vacation, as the markets have been chaotic to say the least, and driving me crazy! I have a quote from Grant Williams that you’ll want to see, later so I have that today… Lee Michaels greets me this morning with his great 70’s song: Do You Know What I Mean?
It’s also what the Catholics call, Ash Wednesday, with marks the beginning of lent, and in addition, it’s also the Chinese New Year! The Chinese will be on holiday all week, so no help from them with regards to keeping the SPT’s in line… Which is why the SPTs have decided to take a few lbs of flesh from the metals this week…
The dollar finished the day weakening yesterday after adding 2 index points to its figure earlier in the day… The BBDXY ended the day at 1,183… Gold & Silver were subjected to more short selling yesterday, as Gold lost $126 and Silver lost $1.43… The currencies, not named the Chinese renminbi and Singapore dollar, lost some ground to the dollar yesterday… But they are still looking better than they were for the first half of 2025! The Chinese renminbi and Singapore dollar are joined at the hip, not really, but it sure seems that way! One can’t get out of line with the other one, as they compete for exports…
The price of Oil remained trading with a $63 handle yesterday, and the 10-year Treasury saw some selling and the yield on the bond rose to 4.06%…
Speaking of Gold… here’s the quote from my favorite read, Grant Willams, and his Things That Make You Go Hmmmm… “I step back from the noise surrounding gold’s recent surge to examine what’s really driving it—and why focusing on the price alone risks missing the far bigger story. Gold itself hasn’t changed. It remains what it has always been: an inert, apolitical store of value that has endured for thousands of years. What has changed—dramatically—is the monetary system in which gold is measured, as unprecedented debt accumulation, relentless monetary expansion, and repeated episodes of crisis intervention have begun to undermine faith in fiat currencies.”
Chuck again… if you don’t subscribe to Grant’s letter, shame on you! It does cost you a subscription rate that is more than worth it in my opinion! You can subscribe here: Things That Make You Go Hmmm… Newsletter – Grant Williams
In the overnight markets last night…. the dollar drifted around the 1,183 figure in the BBDXY, with little movement up or down. The currencies look like a horse in the starting gate, all ready to take off at breakneck speed, but being held back by the gate… There’s a lot of talk going around about how the Countries are going to debase their currencies going forward… I’m not buying it, but then I look at the U.S. and the U.K. And they certainly are getting all lined up to debase their respective currencies, but I’m not see other countries lining up to debase their currencies… So, your diversification of your investment portfolio still is good…
Gold & Silver are attempting to get back on the rally tracks this morning. Gold is up $44 and Silver is up .99-cents to start our day… I wanted Gold and Silver to rally today, my last day writing for a while, to go out on a good note… So, hopefully the rinse and repeat cycle of short selling is over, for now… It certainly looks that way, but you never know with the dastardly SPTs…
The price of Oil bumped higher to trade with a $64 handle overnight… Range bound for sure… Waiting for the next shoe to drop regard the U.S. and Iran… Apparently, they have some agreement with heir negotiations, but I doubt they’ve discussed the Ballistic Missiles that Israel want wiped out… Iran isn’t going to give them up, so the negotiators will have to find another avenue to go down…
The 10-year stayed at 4.07% yield all night and starts this morning at that level. I have something for you on the 10-year a bit later this morning. We, as a country, are really pushing the envelope here with the issuance of bonds to finance our debt… It really scares the bejeebers out of me, and it should scare you too! This has gotten out of control, and the debt servicing (interest rate paid) is causing all kinds of problems with regard to how do we pay it? Print dollars and buy bonds, that’s the recipe that the Fed Heads and Treasury are thinking is in their back pocket and ready to deplore at any time… And that’s the thing that scares the bejeebers out of me…
Ok, moving on… I read a report yesterday on the Japanese yen… Same ol’ problems that have plagued them for 3 decades now, but in this report the former head of the currency in Japan was quoted as saying that the Bank of Japan (BOJ) had missed their opportunity to hike rates to bring inflation in check and bring about a more robust economy… Yes, I truly thought that the BOJ would opt to hike rates not long after they did their first-rate hike in 30 years! But then the BOJ has left the markets disappointed many times previously, so nothing new here!
Recall when I told you the U.S. would be refinancing their debt as previously sold bond are now coming due? Well, the results are in… The U.S. sold $54 billion of 10-Year Treasury notes at 4.18% to replace $25B of maturing 1.73% 10-year notes, pushing up amount outstanding by $29 billion.
This week, the $54 Billion of 10-year notes sold at auction replaced the $25 billion in notes sold at auction 10 years ago… And at a higher rate of interest! That bond, issued 10 years ago, was issued with a yield of 1.625%… So, if any holder of those bonds sold before maturity, they took a hefty loss… Remember, yield down= Price up… Yield up = price down… Those poor souls… the losses had to be quite hefty!
The U.S. is adding to its debt an additional $1 Trillion every 71 days… That has got to stop, or we as a country go down like other countries that ran their debts too high for too long… Or go away like the Dodo bird…
The U.S. U.K, Japan and Eurozone have all run their respective country’s debts too high… Japan is he worst, followed by the U.K. And then the eurozone… The eurozone is at least addressing their debt problem and taking baby steps to correct it.. .At the pace they’re moving now, it would take a lifetime! But aren’t we really only concerned about our country’s finances? Of course we are! It’s the knuckleheads in Congress, the Treasury, and the Fed/ Cabal/ Cartel that are not worried about the debt… I on the other hand have been shouting from the rooftops about our increasing debt since I began writing the Pfennig in 1992…
Yes, that’s the year that I began writing the first form of the Pfennig… Then it was quick notes about what was going on in the foreign markets for our salesmen, who when they arrived, turned on their phones, and had to be ready to talk intelligently to the customers… The salesmen began faxing the letter to their customers… It was a very small list back then… But then our Boss, Frank Trotter, had just designed and coded the website for Mark Twain Bank and he needed content… Well, the Pfennig hit the nail on the head and so it began to be distributed on a wide basis!
Ok, back to the markets, sorry about going off on that tangent… I saw that Alasdair Macleod had in his letter yesterday his thoughts on GDP… (the letter is behind a paywall, and I don’t subscribe!) And I thought that later this week we’ll see an initial print of 3rd QTR GDP, and that got me thinking about how GDP is calculated… First of all, it’s a backward-looking data point… and one that has so many inputs that they get all meshed up with each other… But one component of GDP is Gov. Spending… Right! As if Gov’t spending helped the economy grow… but it’s there, and with the U.S. adding to its debt every day, GDP gets pumped up on Gov’t Spending… So, when you see that GDP prints at 3.8%, you can be assured that a majority of that increase came from Gov’t Spending… Just wanted to get that off my chest…
I sure left you with a pile of bad numbers for the U.S. economy yesterday, that one would have thought that the dollar would be getting sold like funnel cakes at a State Fair… But Noooooooo! But not to worry, I truly believe that the dollar will return to its underlying weak trend, soon enough… I’m picturing the cover of MAD Magazine and Alfred E. Neuman saying, “What Me Worry?”
The U.S. Data Cupboard today has the delayed Dec Durable Goods, which I think will be negative… We’ll also see the Industrial Production & Capacity Utilization prints for Jan… Which I don’t believe will give the dollar bugs anything to write home about… So, we’ll see how the dollar reacts to this wave of bad economic data today… There will also be the release of the Fed’s Meeting Minutes from their last meeting when they left rates unchanged… We know of 2 Fed Heads that went against the chairman’s view that rates didn’t need to be cut at this time…
To recap… Well, the SPTs continued to take a couple of lbs of flesh from the metals… Geez, I sure hope this rinse and repeat cycle ends today… Bond losses for early sellers… Chuck explains… And we just reissued $ 59 Billion of 10-year bonds with a yield of 4.18%, which is way over the previous 10-year bond’s yield was at issuance, which was 1.625%… Do the math, we can’t continue to go on like this, folks…. And Grant Williams visits the Pfennig today… what a treat!
For What It’s Worth… OK, yesterday, I called the BLS liars when they said that the STUPID CPI had risen in Dec only 2.4%, down from the previous STUPID CPI print of 2.8%… Someone at the Fed NY must have read the Pfennig (AS IF) and decided to print their own calculation of inflation and that can be found here: Has inflation really slowed? Not according to this new Fed study. – MarketWatch
Or, here’s your snippet: “An apparent slowdown in inflation since last fall has eased worries on Wall Street, but skeptics are yet to be convinced price pressures have largely evaporated. A new Federal Reserve study might add to the doubts.
The consumer-price index showed the annual rate of inflation decelerating to a nearly five-year low of 2.5% in January from 2.6% at the end of 2025, using the so-called core rate that omits food and energy. The core rate is considered by the Fed to be a better predictor of future inflation.
What troubles the skeptics are the lasting effects of the record 43-day government shutdown last fall. Government economists were unable to collect nationwide data on price changes in October, and they also got off to a late start in November.
By the time they started collecting prices in November, holiday discounts were in full bloom. Many prices were temporarily lower than usual.
As a result, the Bureau of Labor Statistics might have underestimated inflation in October and November, critics say. And that partly accounts for the lower inflation reading in January.
A new study by the New York Federal Reserve doesn’t directly weigh in on the hawk-versus-dove debate. But researchers at the bank use a proprietary price measure to try to pinpoint the underlying rate of inflation by stripping out any temporary factors, including the effects of the shutdown and limited data collection.
What did New York Fed researchers Martin Almuzara and Geert Mesters find? The rate of inflation in the U.S. stood frozen at 2.83% at the end of 2025 — still well above the Fed’s 2% target.
What’s more, the recent slowdown as suggested by gauges such as the CPI could be ”largely transitory,” they said.”
Chuck Again… I really, feel vindicated regarding the STUPID CPI… And then, I doubt the Fed NY’s numbers too! I truly believe that everyone’s inflation is different, but for the most part, I can’t see inflation below 10%
Market Prices 2/18/2026: American Style: A$ .7075, kiwi .6009, C$ .7331, euro 1.1840, sterling 1.3579, Swiss $1.2976, European Style: rand 15.9981, krone 9.4709, SEK 8.9741, forint 319.40, zloty 3.5612, koruna 20.4876, RUB 76.44, yen 153.69, sing 1.2679, HKD 7.8148, INR 90.68, China 6.9048, peso 17.11, BRL 5.2252, BBDXY 1,183, Dollar Index 97.22, Oil $64.06, 10-year 4.07%, Silver $75.65, Platinum $2,036.00, Palladium $1,735.00, Copper $5.77, and Gold… $4,922
That’s it for today and until March 3. How will you function without me each day? HA! As always, you can go to www.dailypfennig.com and read archived Pfennigs to hold you over until I return… Our StL U Billikens’ 18-game win streak came to an end on the road in Rhode Island last night… Ok, time to start a new win streak! I’ll be traveling back to my winter home alone on Saturday. This will be the first time I’ve traveled by myself since 2007… Kathy has accompanied me on all the trips I’ve made since then… 2007 is the year I was diagnosed with Stage 4 Renal Cell Carcinoma… In June it will be 19 years! According to the American Cancer Soc. I should be long gone by now… I proved them wrong! The Rev. Al Green takes us to the finish line today with his song: You Ought To Be… I hope you have a Wonderful Wednesday today, and will Be Good To Yourself, while I’m not here to remind you every day!
Chuck Butler