Welcome Back to LBLF for week of Aug 6. Austerity has been pulled back into the business world and we wish her well, but we will miss her. Without further delay let’s Look Backwards at the items that caught my eye over the last week.
Ratings Agency Fitch has downgraded the Us Credit rating from AAA to AA+.
Fitch downgrades the US credit rating
Quietly, another bank has failed. We saw the sale/merger of PacWest with the Banc of California but another bank just outright failed. Heartland Tri-state Bank in Elkhart, Ks. $139 million in total assets.
India has banned the export in rice which could have ripple effects across asia and north africa. This comes on the heels of the expiration of the Black Sea agreement and constricted wheat supplies coming out of Russia. Last year food prices along with oil spiked as the impact of the Russian invasion of Ukraine shook the world markets for commodities. That was when there were sufficient inventories, but now we are a year later and countries are starting to look internal. India accounts for 40% of the world rice trade.
And now Looking Forwards…
Continuing with the US treasury markets, the US Treasury increased the size of its bond sales by billions across different terms. The fiscal policies of the Biden Administration are having to be funded and it is affecting the bond markets. Remember when the UK gilt markets blew up last fall? It was because the market said we can’t afford to do this. We are seeing preliminary shocks across the US bond market. The Move Index which measures volatility in bonds is still north of 100 meaning that the market isn’t calm cool and collected. There is angst.
The US needs to sell even more debt
Let’s look at Kenya and the rumors that they might default on a Eurobond.
Is Kenya going to default on a Eurobond?
Get woke go broke.