Banks have heavy losses on their books

• Currencies & metals slug through the end of last week in a rut.

• But the breakout happened in the overnight markets last night!

Good Day... And a Marvelous Monday to you! Well, my beloved Cardinals came home from two 3-game road series with a record of 3-3... Play .500 on the road and .750 at home... That was the secret to the pennant in the old days before Wild Card teams... It was an absolute Chamber of Commerce weekend weather here in the MidWest... And it will carry over today, but tomorrow, rain will come back... UGH! The Rolling Stones greet me this morning with their song: Don't You Hear Me Knocking?

We've seen a lot of give and take in both the currencies and metals in recent trading, and that pattern seems to be going to be with us for the near future... The dollar, which got sold on Thursday last week, turned around and got bought on Friday, with the BBDXY gaining 3 index points. The euro has climbed back above the 1.13 handle, and the rest of the currencies are bouncing back and forth aping what the euro does...  

Thursday's Data Cupboard was quite a surprise... Personal Income and Spending was down in April, which was interesting, especially the Personal Spending, in a month that held the Easter holiday. The other piece of data that was interesting was the PCE (Personal Consumption Expenditures) The supposed favorite Inflation calc of the Fed Heads... And it dropping was cause of the dollar getting sold on Thursday last week, because the markets thought that it gave the Fed Heads a green light toward cutting rates in July... 

Gold saw a $31 gain on Thursday and then a $29 loss on Friday... Gold, to me seems to be moving sideways at the time... which normally in the days when I was on the trading desk, you went away in May and didn't look or wild swings either way with Gold throughout the summer... But in recent years Gold has shrugged that old thought off, and rallied... I don't know what it's going to take to get Gold back on the rally tracks stably... Both Silver and Gold are in the neutral range in the RSI (relative strength Index) so, there's no indication there of a move either way... 

The POTUS doesn't seem to help the Gold bugs any, with his tariffs on/ tariffs off announcements... While I'm talking about all this back and forth, the dollar also seems to be in this pattern... So... maybe, just maybe, because you never know (Andujar) the old go away in May thought is coming back... ?

After slipping below the $62 handle on Thursday, the price of Oil bumped back over the figure, and finished the week trading with a $62 handle once again... The 10-year Treasury didn't see much movement from the data prints late last week and finished the week trading with a 4.48% yield...

In the overnight markets last night...There was finally a breakthrough for the dollar and metals... The dollar is getting sold to start the day/ week, and the BBDXY is down 1 index point. But the point here is that the currencies are reacting like the dollar is getting sold down the river. The euro has climbed above the 1.14 handle, and the Swiss franc has climbed above 1.22. The Russian ruble is trading with a $78 handle this morning, and even the Japanese yen is rallying this morning... So, kudos to the foreign currencies this morning, they seem to get it! 

Gold is up $62 to start the day/ week this morning, and Silver is up 52-cents... I think the thought about the Fed Heads cutting rates next month is finally taking hold of the markets' sentiment... I like what I'm seeing this morning, folks.. The breakout has finally taken place, and now we can get back to the currencies and metals rallying, while the dollar gets sold.  

The price of Oil, too, has bumped higher this morning and trades with a $63 handle. The 10-year Treasury bond is getting bought this morning and trades with a 4.43% yield... I think what's going on here is that the bond boys finally think the Fed Heads just might cut rates in July...  

The markets are going to focus on this thought of a rate cut in July, and that's what the news articles and videos are going to be all about until we get to the FOMC day in July... BTW the July date isn't until July 29, so we've got a long waiting period ahead of us, and a lot can happen before we get there... 

Things like the May Jobs Jamboree that will take place this Friday,... Right now, the forecast for the Jobs created in May is just 125,000... But there's no way the BLS will allow a low number like that to be printed... I'm just saying... 

I found this article headline on the DailyHodl.com "$413,200,000,000 in Unrealized Losses Hit US Banks As FDIC Warns Rising Rates Adding Pressure"

Chuck again... yes, and I've got something for you in the FWIW today that addresses these losses and what The U.S. could do to manage the debt and therefore the losses.. 

The Good Folks at GATA sent me this note: "On this week's edition of Kinesis Money's "Live from the Vault" program, London metals trader Andrew Maguire says the international shift from gold derivatives to physical gold is hastening, led by China and the BRICs countries.

The report, "Bullion Banking Explained," was effectively an admission from inside the bullion banking industry that it was using the futures markets to create vast supplies of imaginary gold that suppressed the price of the monetary metal. CPM Group, Maguire says, has tried to conceal that report but it remains at GATA's internet site. Maguire says the fraudulent regime of the bullion banking industry is coming to an end."

Chuck again... now that's music to my ears! That the fraudulent regime of the bullion banking industry is coming to an end! 

The U.S. Data Cupboard from last week has already been covered ahead... Today's Data Cupboard has the ISM for May (manufacturing index), which has been below the contraction denominator of 50 for quite a few months now... One would think that if the POTUS's plan works out that Manufacturing would rebound, but I guess we'll have to wait-n-see, eh?  

To recap... The dollar and metals seems to be moving sideways these days... Up one day, down the next with no real direction for them to take... Chuck thinks that maybe we could be seeing the old adage of Go Away In May... The Banks have HUMONGOUS Losses on their books from the rise of yields in bonds... If you recall that was the death knell of the banks last March... The problem was taken care of then, and it could be coming back to haunt us...

Here's your snippet: "The global wealth manager UBS says that the US government’s massive $36.2 trillion debt burden may cause it to take more extreme financial measures.

In a new report, UBS says that the US government may be forced to make its growing debt burden more manageable by turning to additional financial repression measures that would artificially lower the yield on government bonds.

“We expect that, over the longer term, the US government may pursue both fiscal consolidation and financial repression – a phenomenon that already exists in some form in the US and many other countries – to contain yields and keep the high debt burden manageable.”

One potential financial repression measure may be to reform the supplementary leverage ratio (SLR) for US banks, according to UBS.

“Presently, large US banks must hold equity capital against all assets, including high-quality ones like Treasuries. Loosening the SLR could be justified as supporting bank lending, but excluding Treasuries from capital requirements would incentivize banks to hold more Treasuries, potentially enhancing market liquidity.”

UBS says the US is well-positioned to successfully implement financial repression measures, as long as they are put in place on a temporary basis."

Chuck again... Well, let's hope it's not a "temporary Basis" like taking the dollar off the Gold Standard was in 1971...   But keeping yields manageable will be an interesting undertaking by the Fed Heads, but in reality, they are already doing that... They are buying bonds every time their yields begin to get rolling higher... I'm just saying...

Market Prices 6/2/2025: American Style: A$ .6482, kiwi .6016, C$ .7297, euro 1.1416, sterling 1.3528, Swiss $1.2226, European Style: rand 17.9353, krone 10.0882, SEK 9.5082, forint 352.99, zloty 3.5292, koruna 21.8824, RUB 78.99, yen 142.98, sing 1.2883, HKD 7.8442, INR 85.35, China 7.1990, peso 19.27, BRL 5.6909, BBDXY 1,210, Dollar Index 99.36, Oil $63.44, 10-year 4.43%, Silver $33.49, Platinum $1,058.00, Palladium $1,006.00, Copper $4.87, and Gold... $3.359.10.

That's it for today... I forgot to welcome you to June... above... and Pfennig tradition calls for this: June is busting out all over, all over the meadows and the hill, Buds ’re bustin’ outa bushes, And the rompin’ river pushes Every little wheel that wheels beside a mill. A little Rodgers and Hammerstein to start your day! I was supposed to be appearing in the H.S rendition of Carousel... Had rehearsed, and was ready to perform when the teachers went on strike in 1973... So, no musical, no performance, we almost didn't have a graduation! Oh well, I was never going to be the next Gordon MacRae anyway! Van Morrison takes us to the finish line today with his song: Into The Mystic... I hope you have a Marvelous Monday today, and please Be Good To Yourself!