Russia Halts Bond Auctions

Russia's Finance Ministry has suspended federal government bond auctions indefinitely as borrowing costs climb and investor demand weakens, complicating efforts to finance a widening wartime budget deficit.

The ministry said on Monday it was halting its regular weekly auctions of government bonds, known as OFZs, "to facilitate the stabilization of market conditions." It did not say when sales would resume, saying only that it would announce their restart at a later date.

OFZs are ruble-denominated government bonds that underpin Russia's financial system. They are the government's primary source of domestic borrowing to cover budget deficits, while banks hold them to manage daily cash needs and foreign investors buy them for returns.

The Finance Ministry has relied heavily on domestic borrowing to help finance a budget deficit that reached 5.7 trillion rubles ($72.39 billion) at the end of June, while military spending continues to outpace initial government plans.

Prices of OFZs have fallen sharply since mid-June. The RGBI government bond index has dropped from around 119 points to about 110, its lowest level this year, while yields on bonds with maturities longer than 10 years have climbed above 16.5%.

Read the rest here.

See also... Could Russia's Wartime Debt Boom Trigger a Banking Crisis?

The S&P 500 is flashing a warning sign

With all of the volatility in the stock market this year, most investors probably don't realize the S&P 500 (SNPINDEX: ^GSPC) is sitting at a precarious peak. The index's cyclically adjusted price-to-earnings (CAPE) ratio now hovers near a reading of 41 -- a territory that historically signals serious trouble ahead.

The CAPE ratio captures something deeper than daily price movements: It reveals how much investors are willing to pay for every dollar of long-term earnings power. At its current level, the S&P 500 appears to be pricing in unprecedented levels of optimism while quietly laying the foundation for a painful reckoning.

The CAPE ratio was originally developed by economist Robert Shiller. The metric divides the current S&P 500 price by the average inflation-adjusted earnings per share (EPS) over the previous 10 years. By doing so, the CAPE ratio smooths out any temporary spikes or dips caused by recessions, economic booms, or one-time events. This approach gives a clearer picture of sustainable valuation across the index as a whole.

At face value, the price-to-earnings ratio can appear deceptively attractive in years of strong profitability. But the CAPE forces investors to look across full business cycles. The underlying data for the CAPE ratio stretches back to 1871 -- more than 155 years of market history.

Across that span, the long-term average CAPE has hovered between 17 and 18. As the chart indicates, when the CAPE ratio climbs well above the 25 to 30 range, it has repeatedly warned that future stock returns will be disappointing.

Read the rest here.

The bond market is flashing a warning sign for the global economy

New York —  Take it from President Donald Trump himself: Stocks and commodities can throw easily ignored tantrums, but when the bond market gets “yippy,” you pay attention.

Ultimately, it took a sharp bond market selloff in April of 2025 to get Trump to pump the brakes on his sweeping “reciprocal” tariff agenda.

Once again, the bond traders are barking. But this time, it’s not clear whether Trump can do much to calm the market anytime soon.

“The bond market is basically reacting to the uncertainty created by oil prices, and (Trump) seems not to know how to get out of the problem he’s put us in,” said Daniel Alpert, managing partner at investing firm Westwood Capital, in an interview.

Put another way: Bond traders are starting to think that the recent inflation spike — largely a result of the war shutting off oil flows through the Strait of Hormuz — may not be as “short-term” as Trump has claimed. And that will likely depress bond prices even more.

Read the rest here.

Amateurs obsess over the stock market. Professionals watch the bond market.

The SpaceX IPO

See also...

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SpaceX insiders will get to sell shares earlier than usual after the IPO

A direct quote from the prospectus...

“We believe the next paradigm shift for humanity is the creation of a resilient, perpetually expanding spacefaring civilization that drives continuous innovation across new frontiers, ultimately propelling us to Kardashev Type II status—we believe we are capable of unlocking an era of unprecedented economic expansion, while also contributing to the safeguards of humanity’s future against existential risk.”

This sounds like a bad imitation of a Star Trek novel.

Jamie Dimon warns of ‘some kind of bond crisis’

CEO Jamie Dimon on Tuesday warned that rising government debt levels could trigger a crisis in the bond market, urging policymakers to act before markets force their hand.

Dimon’s statement was in response to a question about whether he was worried about rising levels of government debt “around the world and in your country.”

“The way it’s going now, there will be some kind of bond crisis, and then we’ll have to deal with it,” Dimon said at an investment conference held by Norway’s sovereign wealth fund, the largest in the world.

“I’m not that worried we’ll be able to deal with it,” Dimon said. “I just think maturity should say you should deal with it, as opposed to let it happen.”

Dimon, who runs the world’s largest bank by market cap, said history has shown that today’s growing mix of risks could combine in unpredictable ways. While the timing is uncertain, failing to address those pressures increases the odds that adjustment comes after upheaval rather than deliberate policy moves.

Read the rest here.

The Economic Risks From Trump's War Are Real and Growing

The Economic Implications of Trump's War

This is one of the best explanations I have seen for what is going on, and what might be coming down the road.

Underestimating the Potential Energy Shock

It is hard to decide which is the bigger disaster: the unfolding car crash in the global gas market or the mounting danger that entire countries will run out of oil.

The benchmark TTF contract for gas in Europe was €29 (£25) per megawatt-hour (MWh) in mid-February. Bank of America says it could reach €500 this winter if the Strait of Hormuz remains closed for 10 weeks, as it may well do.

That would blow through the record high seen after Russia’s invasion of Ukraine and amount to a full-blown economic emergency for Europe, the UK, Japan, South Korea and South Asia.

The picture is dramatically worse after Israel attacked Iran’s South Pars gas field, adding upstream gas and oil infrastructure to the menu of targets on both sides of the Gulf.

Iran’s missile retaliation on Qatar’s Ras Laffan has inflicted serious damage to the giant complex, which alone produces a fifth of the world’s liquefied natural gas (LNG).

It will be months before shipments start again. Qatar Energy says 17pc of production is lost for three to five years. It will have to declare force majeure on LNG supplies to Italy, Korea, China and Belgium.

It is just as bad for oil. The paper market that we all follow does not capture the drama. Physical deliveries are under far greater stress than Brent futures, at about $113, would suggest.

Actual barrels of the Dubai basket and Oman’s Murban are fetching close to $170 a barrel as Asian refiners scramble to buy anything they can. Jet fuel deliveries have hit $210 in Rotterdam and $240 in Singapore.

Kurt Barrow, the vice-president of oil at S&P Global Energy, says it may become physically impossible to obtain supplies. “If the Strait stays closed for two months, you’ll have plants without feedstock and we’ll get real rationing. We’ll have panic buying and hoarding,” he said.

“This is the largest supply disruption ever. Net, we’re around 15 million barrels a day (b/d) short in the market. Crude gets the headline but the actual impact is further downstream in refined products, diesel, jet, fuel or naphtha. There are 68 refineries in the war zone.”

Read the rest here.

The federal debt is a stealth tax on every American

In response to concerns about affordability, President Trump proposed capping interest rates on credit cards at 10 percent. But the federal government’s own credit card — the national debt — is already making life less affordable for all Americans. 

U.S. consumers paid $160 billion in credit card interest in 2024, averaging just under $1,200 per household. That’s a lot of money, but it’s only one-sixth as much as the $1.028 trillion we paid in net interest on the federal debt in fiscal 2025. 

At $7,600 per household, interest on the federal government’s debt costs more than the average household spent on retirement contributions ($1,991), gas ($2,411), healthcare ($6,197) or groceries ($6,224) in 2024. Even as housing costs have surged, federal borrowing is costing Americans the equivalent of three and a half months of mortgage or rent payments.

One might argue that Americans aren’t really paying $7,600 per household in interest each year, because taxes haven’t risen to cover those costs. That is true — for now — because the federal government is adding its interest costs to the debt, the fiscal equivalent of not even making the minimum credit card payment. 

But Americans are already paying higher interest rates on everything from home mortgages to small business loans to credit cards, because, as the Congressional Budget Office has explained, when federal borrowing increases, “the amount of funds available for private investment would decline (a phenomenon known as crowding out), and interest costs would increase.”   

Read the rest here.

Gold Corrects and Silver Crashes

What a difference a day makes. Gold off 8% and Silver down ~30%. Both still up YTD. Not terribly surprised. Both metals were basically going parabolic. But the catalyst for the bull market in precious metals remains. Trump is still going to be president for another three years. 

Gold is the New Trump Trade

https://www.axios.com/2026/01/27/trump-gold-rally-risk

What is going on in the financial markets?

Ray Dalio warns that the monetary order is breaking down, leaving us with a terrible choice: ‘Do you print money or let a debt crisis happen?

The looming debt crisis

Gold tops $5,000 for the first time in 'breathtaking and profoundly scary' rally

Just as a quick historical note; the last time the US had a financial panic that did not center on the stock market, was way back in 1893. And it was U G L Y. 

‘Sell America’ trade: Dollar drops, gold surges as Trump’s Fed pressure campaign raises fears about U.S. system

Precious metals are jumping to records. The U.S dollar is dropping. Stocks are choppy.

Monday is all about the “Sell America” trade after Federal Reserve Chair Jerome Powell’s bombshell announcement that he’s under criminal investigation — which market participants see as a sign of President Donald Trump’s interest in stripping away the central bank’s political independence.

“This is unambiguously risk off,” said Krishna Guha, head of global policy and central bank strategy at Evercore ISI.

Guha said a so-called “Sell America” trade could play out similarly to what was seen in April, when the stock market cratered after Trump first announced his plan for broad and steep tariffs. Global investors will place a higher risk-premium on U.S. assets, while safe-haven trades like gold should take a leg up as a response to the turmoil, he said.

The Dow Jones Industrial Average fell nearly 500 points at one point in morning trading, while the U.S. dollar index shed 0.3%. But the popular safe-haven trades of gold and silver surged to all-time highs in the session.

“Clearly, the market doesn’t like it,” Ed Yardeni, president of Yardeni Research, told CNBC on Monday.

Read the rest here.

Gold and Silver Rise Sharply

Gold and silver prices soared to new highs on Monday.

Gold was last seen at a record $4,445.8 per ounce while spot gold was last trading at $4,414.99. Prices are up nearly 70% since the start of the year.

The metal has soared this year, smashing consecutive price records as risk assets lost ground. Gold is typically viewed as a safe haven asset in times of economic or geopolitical turbulence...

Read the rest here.

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Gold Posts New Record

Gold currently trading at ~$3,566 /oz amidst expectations of the Fed cutting interest rates (whether by choice or under presidential coercion), and the risks of a weaker dollar and higher inflation. 

Update: Gold closed at $3,599 /oz. 

Ambrose Evans-Pritchard: Trump is playing with fire in his attacks on the Federal Reserve

The US Federal Reserve must henceforth be considered the personal political agency of Donald Trump. America’s monetary credibility has been utterly trashed.

The world’s superpower central bank will set interest rates at his whim, much like the Turkish central bank under the Erdogan regime.

Markets must now assume that Trump will compel the Fed to soak up America’s exorbitant debt issuance and hold down long-term interests by a form of de facto yield curve control.

They must also assume that Trump will force the Fed to press the pedal to the floor and slash interest rates far below the natural Wicksellian rate until the midterm elections are safely out of the way next year.

Trump has crossed the Rubicon by purging an independent member of the seven-strong Fed board, each appointed for 14 years with Senate confirmation and protected tenure to shield them from pressure.

He has already sacked the protected head of the Federal Trade Commission and got away with it, so the latest abuse should hardly come as a surprise.

If there were any authenticity to the sacking of Lisa Cook, one of the federal governors, under the legal category “for cause” it would have entailed a genuine probe under due process.

Trump’s obvious purpose is to bring the Fed under his full control immediately and, above all, to issue an implicit warning to any member of the Federal Open Market Committee who refuses to toe the line that they too will be disposed of if anything can be found against them – and something can always be found.

“It’s an authoritarian power grab that blatantly violates the Federal Reserve Act, and any court that follows the law will overturn it,” said Elizabeth Warren, the veteran Democrat on the Senate Banking Committee.

Her caveat is noted. It takes some courage for intimidated judges to “follow the law” in Donald Trump’s America.

The dollar was already on borrowed time as the world’s hegemonic reserve currency before the death of the Fed. The process will now accelerate, with potent implications for the dollarised system of global finance.

The Bank for International Settlements estimates that $13tn (£9.6tn) of offshore global debt is denominated in US dollars, or $35tn if you include embedded liabilities in swaps and other derivatives.

Trump can bulldoze his way through resistance within the US – and he can strong-arm foreign allies into concessions, until they cease to be allies – but there is one great immovable power that is beyond his reach.

He cannot force the global bond market to buy US treasuries and fund his debt.

The Achilles’ heel of Trumpism is that the US has a net international investment position of minus $24.6 trillion, or 82pc of GDP. It has a personal savings rate of 4.7pc, a fraction of US post-war levels or of global levels, and is living off a constant supply of foreign credit to cover day to day spending.

Read the rest here.

One additional factor not getting a lot of attention in all of this is that Trump has been investing hundreds of millions of his own money in US bonds since he won re-election. If he can force down interest rates, he stands to make a killing.

Foreign investors buy nearly 100 billion in euro zone debt

LONDON, July 21 (Reuters) - Euro zone debt saw nearly 100 billion euros ($116 billion) of buying from outside the bloc in May, Citi said citing European Central Bank data, the latest sign that euro assets are benefitting from a shift away from U.S. markets.

The 97 billion euros of net inflows into euro zone debt with maturities longer than one year was the largest on a monthly basis since at least 2014, Citi said, pointing to portfolio flow data from the ECB.

Read the rest here.

Moody's Downgrades US Credit Rating

Moody’s Ratings slashed the United State’s credit rating down a notch to Aa1 from the highest triple A on Friday, citing the budgetary burden the government faces amid high interest rates.

“This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” the ratings agency said in a statement.

The U.S. is running a massive budget deficit as interest costs for Treasury debt continued to rise due to a combination of higher interest rates and more debt to finance. The fiscal deficit totaled $1.05 trillion year to date, 13% higher than a year ago. The influx in tariffs helped shave some of the imbalance last month, however.

Moody’s had been a holdout in keeping U.S. sovereign debt at the highest credit rating possible, and brings the 116-year-old agency into line with its rivals. Standard & Poor’s downgraded the U.S. to AA+ from AAA in August 2011, and Fitch Ratings also cut the U.S. rating to AA+ from AAA, in August 2023.

Read the rest here.

Long overdue.

Crypto is near bear market territory

Crypto is flirting with, or potentially has crossed into bear market territory. A bear market is usually defined as a market index or asset class dropping by 20% from its nominal high trading value. Usually this is based on the price at the close of trading days. However most crypto currencies trade 24/7 so that complicates things a bit. That said, the by far largest crypto currency is Bitcoin  which reached a nominal high just north of $103k per unit in the aftermath of Donald Trump's re-election. During intraday trading today it fell to ~$82.2k which would meet the technical definition for a bear market. As of this comment, it is currently trading at just over $83k.