Daily Treasury Statement Charts Update: 3/5/11

An update of the daily treasury statement charts for 3/5/11:

 

Daily Treasury Statement - Total Operating Balance Vs S&P 500 Chart

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The total operating balance of the US Treasury fell by $16 billion on Friday and rose by $45 billion yesterday (latest). The so-called ‘risk-on’ trade has taken a breather over the past few days. The major US equity indices and gold have pulled back slightly, commodities in general haven’t been acting all that well, and silver has taken a 14-15% haircut over two days. We should also note that emerging market equities haven’t been performing all that well – the april high in the EEM etf (for example) hasn’t been taken out convincingly. Moreover, inline with the deteriorating real interest picture in Russia, the MICEX index seems to be forming a bearish ‘head and shoulders’ topping pattern:

 

MICEX Index Chart

Source: Bloomberg.

 

However, in spite of such looming warnings, the lagged daily treasury statement charts (below) are saying that this short-term up-trend could continue for around 5 weeks. For those just stumbling onto greshams-law.com: As always, I warn that this interpretation could be deemed to be alchemistic in nature. The broad thesis is that net government spending is bullish for asset prices (on a lagged basis) and net accumulations of cash are bearish for asset prices (on a lagged basis). For a more detailed interpretation of these charts see here.

 

Daily Treasury Statement - Operating Balance Vs Dow Inverted LAGGED

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Daily Treasury Statement - Operating Balance Vs S&P 500 Inverted LAGGED

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Daily Treasury Statement - Operating Balance Vs Russell 2000 Inverted LAGGED

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Daily Treasury Statement - Operating Balance Vs VIX LAGGED

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Posted May 3, 2011