Daily Treasury Statement Charts Update: 30/3/11

An update of the daily treasury statement charts:

 

Total Operating Balance Vs S&P 500

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The total operating balance of the US Treasury fell by around $7.5 billion yesterday (latest). After the past few days, one has to think that – if anything – the markets have entered the crack-up move stage described by the charts. Of course this could be confirmed or denied by the next few days of trading. I explain here, why I think that watching the daily treasury statement is useful in this long-term deleveraging environment.

 

The general thesis is that net withdrawals of cash by the US Treasury are bullish for risk assets, and that net accumulations of cash by the US Treasury are bearish for risk assets (on a lagged basis). The charts of the (lagged) total operating balance against (current) risk assets are shown below:

 

Total Operating Balance Vs Dow Inverted (LAGGED)

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Total Operating Balance Vs S&P 500 Inverted (LAGGED)

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Total Operating Balance Vs Russell 2000 Inverted (LAGGED)

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Total Operating Balance Vs VIX (LAGGED)

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See here for our collection of rare historical economic data.

Posted Mar 30, 2011