Problem is the US market fell first, then we follow in their off hours, then Asia goes red, then the US reacts to that, then we follow, then Asia goes red, and on and on. (I bet Deutsche bank is crapping itself over the derivatives atm - I noticed the IVX vix inverse derivative lost 90% and institutions are pulling out of it).
The bond market wasn't in good shape to begin with and the Federal reserve has stopped buying (they aren't selling, they are letting the bonds they hold come due). This means in December they will start falling due and I really think people will start pulling their money from the market before then. (Not sure if this is really the start of it, or just a prelude).
https://en.wikipedia.org/wiki/History_of_Federal_Open_Market_Committee_actions
If the USA brought interest rates to reasonable 1990's type levels they'd be up for over $2 Trillion a year JUST IN INTEREST PAYMENTS....at current interest rates they pay around $550m last I looked (to give you an idea of the difference).
They are the guy with a mortgage, boat, car, personal loan and only has a part time job to pay it all with, so he keeps putting payments on the credit cards..
The dollar has been falling constantly for over a year now (It lost about 20% from memory).
Something has to give. Even if they stop this short term - this is just the beginning. I'm betting more QE before December and that means commodities and gold (lithium too).
The US dollar is over OR they default on treasuries.
China rates US Treasuries at the same rating as Columbia.
https://www.bloomberg.com/news/arti...-as-level-as-colombia-by-chinese-ratings-firm
They need to cut spending drastically. The tax cuts were probably an awful idea, but are likely cushioning the sell off right now because people know it will kick in this year.
I think it's bullish for AVZ in the end, because the $AUD
WILL depart from their usual 70-80c usd level eventually because more of our economy is in Asia not the US. US will be paying a lot more for commodities - which is why they will rise there.
(20min delay)