U.S. ten year bond rates closed just under 3.1% this week. Mortgage rates, (thirty rate year fixed rate average) jumped to 4.6%.
The return to 4.5% ten year bond yields will materialize within a two year time frame. The Fed Blue Dot forecast is for short rates to rise to over 3% by 2020. The Fed is worried about the implications of Trump economics. The GOP fiscal stimulus will exacerbate inflation and the twin deficit dilemma.
Trump economics policy is forcing US rates to rise, creating problems in the developing world especially in South America. Argentina has already booked a date with the IMF borrowing team. Such is the requirement to match the currency outflows as a result of the lure of the dollar yield.
Trump foreign policy is creating chaos around the world. Old alliances are under threat in South East Asia and in Europe. Merkel and Putin exchange flowers and gifts. "The enemy of my friend is is my enemy" As Trump attempts to become the enemy of all. Peace in the Middle East will not be secured by moving the Embassy in Israel nor by moving the goal posts in the nuclear deal with Iran.
Threats on trade and defense spending will not ease tensions within NATO. Threats on trade and defense spending will not ease tensions in South East Asia as far as Japan and South Korea are concerned.
Progress on peace in Korea will not be secured by references to Libya and Gadaffi as a threat or a promise in securing talks. Kim Jong-un will not be swayed by promises of White House support to the regime post de nuclearization. Trump has already been seen to walk away from too many international agreements in his tenure in office. NAFTA, TPP, NATO, climate deal, Iran nuclear deal ... mean, petty and vindictive is no basis for policy at home and abroad.
Mean, Petty and Vindictive - no basis for policy at home and abroad.
Rex Tillerson this week said "I observe a growing crisis of ethics and integrity in the state of American Democracy". Left unconfronted, American democracy will enter its twilight years. Tillerson's relationship with Trump was fraught. His time in government was limited when NBC reported in October, Tillerson had called Trump a "moron". He denied making the remark.
The evidence is emerging for the world to see. The theory of countervailing power is in sway. Old allies will develop new friendships accordingly. Trump has his eye on the prize, it's the Nobel peace prize ... strange that ... just a "medal for a moron" perhaps ...
That's all for this week, have a great week-end,
John
Join me at the Big Social Media Conference in July ... Another great event in the pro-manchester calendar!
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