Daily Treasury Statement Charts Update: 5/5/11
An update of the daily treasury statement charts for 5/5/11:
The total operating balance of the US Treasury fell by $24 billion on Tuesday and rose by $4 billion on Wednesday (latest). Commodities, stocks, precious metals, energy and currencies all took a big hit yesterday – with only the dollar, Japanese Yen and US government bonds rising. Although the lagged daily treasury statement indicators (below) suggest that such market pressure will persist only in a few weeks, we should note that the general picture on these charts is bearish. The US private sector is caught in a ‘short squeeze in money’ (i.e. excessive debt), when the US government steps in to take short positions in money (i.e. take on debt), said short squeeze is alleviated. Conversely, when the US government cease to ‘sell money and buy things’, the long-term private sector deleveraging trend has the platform to take hold.
In spite of the above, 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.
Recommended: Charting the Federal Reserve's Assets - 1915 to 2012