- the dollar goes on a mini-rally
- The ECB hikes rates…
Good Day… And a Marvelous Monday to you! Well, last Friday was the 25th observance of the deadliest attack on American Soil… I recall sitting at my desk at work with my little B&W 12-inch tv on and suddenly, the whole office was crowded around my little TV, watching the attacks in NYC and the Pentagon… It was surreal, and I couldn’t get my arms around the fact that these cowards had attacked the U.S…. There was more to find out, and I didn’t like any of it… No one did! Linda Ronstadt greets me this morning with her song: Blue Bayou…
The PPT was in on Thursday and Friday last week as they saw an opportunity to intervene with everything else going towards a rising dollar… First of all, the price of Oil reached $100 again, and that along with a soaring PPI (Wholesale Inflation) got the rate hike campers all lathered up and they began to buy dollars…
The BBDXY recovered 3 index points on Thursday, and Friday drifted higher to end the week at 1,190… Take those two items along with a pinch of PPT, and you’ve got the recipe for a mini dollar rally…
Gold / Silver didn’ fare too well on Thursday, with the boys in the band, (the SPT’s) taking their pound of flesh. But the two rebounded on Friday with Gold ending the week at $ 4,347, up $32 on the day. . And Silver ended the week at: $ 64.37, up 92-cents… .
The rising yields in bonds are weighing on Gold/ Silver too… The 10-year Treasury reached 4.97% to end the week… I had told you that the 10-year would get to 5% and beyond a month or so ago, and now It’s upon us…
What this is going to do to bond servicing costs for the U.S. is astronomical in terms of distress on our finances… But It is what it is… and bonds globally are really causing pain on Gov’ts…
The price of Oil reached $100 again on Friday last week… and Diesel fuel rose to $7… Yikes, trucking companies must be pulling their hair out…
In the overnight markets last night…the dogs of the dollar were released! The dollar gained 4 index points in the BBDXY last night and starts today/ this week at 1,194… The STUPID CPI wars to blame for all this renewed rate hike talk… I’m still on the fence regarding the FOMC actually hiking rates tomorrow… But, I guess we’ll see, eh?
Gold / Silver are taking it on the chin again this morning with Gold down $57 and Silver down $1.40… Again, up one day, down the next… The summer is just about over, and that’s historically when these two get off the duff and get to rallying… I think the SPTs know that as well, and are making things difficult for the two metals before they get going higher…
That’s just me thinking out loud, folks… Take it for whatever you think it’s worth… Me? I would be backing up the truck to take advantage of the cheaper prices of Gold/ Silver… I’m just saying…
This from Reuters: “European Central Bank raises interest rates for the second time this year, bumping deposit facility rate, up to 2.5% in response to surging energy costs. But with the dollar staging a mini-rally the euro didn’ respond favorably to the rate hike… It’ll come.. That’s my Pfennig for you today.
The Bank of Japan is set to meet this week, and most observers see the BOJ hiking rates again… I know that sounds strange, because it had been over 2 decades since the BOJ took on inflation, but it is what it is…
The yen has really rallied a for now… Rate hike thoughts and the overall drop in the dollar are the reasons for the rally in yen. But… Japan’s debt problems, their demographics, and isolation still weigh on the yen, and will come back to haunt the yen once again, in due time… A Pfennig for you from me, today.
The European Central Bank (ECB) surprised even me this past week with a rate hike of their own. This from Reuters: “European Central Bank raises interest rates for a second time this year, bumping the deposit facility rate to 2.5%. They said that this was in response to surging energy costs. But with the dollar staging a mini-rally the euro didn’ respond favorably to the rate hike… It’ll come… That’s another Pfennig from me today for you…
So, we have the BIG 2 Central Banks meeting this week to discuss interest rates… The Fed/Cabal/ Cartel, and the BOJ… And from the looks of it, all will hike rates in response to rising inflation…
Speaking of rising inflation, I wonder what the propeller heads were thinking when the showed that the STUPID CPI was only 3.4% YTD? I guess they couldn’t come out and print a real inflation number, so they settled for a 3.4% rate, which is still 1.4% above the 2% target that the Fed Heads set…
Of course, that 2% target hasn’t been matched, so one has to wonder just what the Fed Heads are doing? I mean, why set a target when you never intend to aim for it? But that’s a question for them to ponder…. And from my view from the cheap seats… They aren’t pondering anything…
Except, the Fed Heads say their main focus is on inflation… They are stuck between a rock and a hard place… The old two-handed economist comes out… On one hand, the Fed Heads want to show the public that they can fight inflation and bring it down… On the other hand, they realize that to help with the $40 Trillion debt, that higher inflation would certainly help to reduce it…
The Petrol Currencies are really having a ball right now, with the rising costs of global Oil.. The Norwegian krone, the U.K. Sterling, and the Brazilian real have really responded favorably. Shoot Rudy, even the Mexican peso and Russian ruble are looking better these days…
I told you last week that the Norwegian Wealth Fund, was thinking about reducing their Treasury / dollar holdings because of the rising risk in holding U.S assets. This is HUGE folks… because the total of Treasury holding by the Fund, is somewhere around $40 Billion… that would end up seeing the bond market absorb $40 Billion of supply that no one wants right now… Uh-Oh! This isn’t a “policy” right now, but all indicators point to the actual selling of Treasuries… I’m just saying…
The U.S. Data Cupboard is empty today, but all eyes are on Tomorrow, when he FOMC meets and a rate decision will take place… I’m still on the fence about the FOMC actually hiking rates this close to a general election… That’s why I have my eye on the Dec 9 FOMC meeting for the first rate hike… But I do admit that all signs point to a rate hike tomorrow, so there’s that…
To recap… The dollar selling last week ended on Thursday with some data that points to a rate hike this week. On Friday, though the dollar jus drifted a bit higher… In Chuck’s mind, we’ll get back to dollar selling after the FOMC meets tomorrow… The Bank of Japan will meet this week to discuss rates, and the ECB did raise them last week.
For What It’s Worth.. Well, we only have one more month to go before we close the books on the U.S.’s fiscal year… And the word is not good as to what to expect… This is what this article on Zerohedge.com has for us and it can be found here: US 2026 Budget Deficit Hits $1.97 Trillion With One Month Left; Interest At Record $1.4 Trillion | ZeroHedge
Or, here’s your snippet: “With DOGE disbanded more than a year ago, and tariffs struck down by the Supreme Court, the US is no longer even pretending that there is any hope to normalize spending, or any kind of happy ending to the US debt trajectory.
At 2pm today the US Treasury published the latest, August, monthly budget deficit data, and it should come as no surprise to anyone that things are looking ever worse.
Total US receipts were $360 billion, a modest improvement from the $344 billion a year ago, with individual income taxes accounting for $179 billion, or half of the total, and the bulk of the balance coming from Social Insurance and Retirement receipts of $141 billion.
On the spending side, things were ugly: total outlays were $527 billion, a modest improvement to the $689.1 billion a year ago, but much of that had to do with the calendar impact of tariffs.
Putting receipts and spending in context, a chart of the trailing 6 months of government revenue and spending shows that the two trendlines are rapidly diverging, with spending on pace to surpass the covid all-time high, even as government revenue remains stuck in a much more narrow range.
The difference between the two, is of course, the US budget deficit, which in August was $166.8 billion, an improvement from July’s massive $432 billion deficit, which however was the result of some calendar discrepancies between the two months. What matters more is that fir the first 11 months of fiscal 2026 (with just one month left in the fiscal year), the total US deficit is now $1.97 trillion, identical with last year, although since 2025 saw a big drop in the final month of the year, we are confident that 2026 will be about $200bn worse than the previous year when all is said and done, and be the 3rd worst year for the US deficit on record, with just the crisis years of 2020 and 2021 worse.
Finally, turning to the elephant in the room, namely interest expense, in August the US spent $98 billion on gross interest expense, which means that with 1 month left in fiscal 2026, total US interest spending is now $1.267 trillion, up 12% from a year ago…”
Chuck again… And in my own opinion, the spending on bond servicing (interest) will continue to grow higher and higher… Think of Sly Stone and Woodstock, saying, ” I want to take you higher”… Speaking of Woodstock, I need to get my recording of it and watch it again, I always get a kick out of it…
Market Prices 9/14/2026: American Style: A$ .7129, kiwi .5772, C$ .7200, euro 1.1550, sterling 1.3490, Swiss $1.2243, European Style: rand 16.2487, krone 9.3239, SEK 9.7711, forint 316.37, zloty 3.7594, koruna 21.0372, RUB .8422, yen 154.5, sing 1.2706, HKD 7.8435, INR 95.55, China 6.7089, peso 17.09, BRL 5.1614, BBDXY 1,194, Dollar Index 99.48, Oil $103.13, 10-year 4.97%, Silver$63.20, Platinum $1,776.00, Palladium $1,312.00, Copper $642, and Gold $4,292
That’s it for today… The Moh’s surgery on my scalp went off without a hitch… Some pain yesterday but that was soothed by the fact that my beloved Mizzou Tigers beat the heck out of the KU Jayhawks… That was fun! I sat outside at my son, Andrew’s house, watching the game on a big projector screen, with his friends, that really got a kick that I still get excited about Mizzou Football! Andrew is a great host, too! I was up la lot last night so I’m dragging the line this morning…. Sweet takes us to the finish line today with their song: Fox On The Run… (this is a good song too!) I hope you have a Marvelous Monday today and Please Be Good To Yourself!
Chuck Butler