Daily Treasury Statement Charts Update: 11/5/11
An update of the Daily Treasury Statement Charts for 11/5/11:
The total operating balance of the US Treasury rose by $1.5 billion on Tuesday and fell by $7 billion on Wednesday (latest). With the exception of the dollar, the yen and US Government bonds, markets have been pretty weak of late. As is often reiterated here on greshams-law.com, the private sector is in a long-term deleveraging trend. When the government spends and levers up, such deleveraging pressures can be alleviated, however when they cease to spend vigorously (as can be seen on the above chart), the deleveraging trend resumes in full force.
However, despite what is said above, the lagged daily treasury statement indicators (below) continue to suggest that the next 4 weeks could be positive for equities. 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