USD breaking down as we are all waiting for Trump's "big beautiful bill".
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hey everyone it is wednesday 21st of may 2025. just a real quick one at the top here about the whole youtube idea of putting some of these podcasts or all of them on youtube i think it will most likely be that we only put the larger ones with the visuals on youtube if we do go the youtube route

Many of you expressed appreciation for the idea. Others said, don't do stuff on YouTube. You're not doing it on the normal channel because I don't use YouTube. So understood on both accounts, and we'll try to make sure that whatever format we come up with, it works both places. If we do something special for YouTube, we'll of course flag that and provide a link in the podcast description.

And just – this is just riffing off the top of my head. That could be something like a live chart walkthrough on occasion or something like that if that could be of interest. But yeah, let's put that one to bed. And again, thank you so much for your feedback. It really does provide a good sense of where we are and where our most engaged audience is thinking – how you, our most engaged audience, is thinking on all of these things.

Boy, there's so much to talk about, but I am going to keep it short today. Tomorrow is going to be a big, longer podcast, which we should be up for, with some good links for you and just an excellent tweet I was sent today, which is so comprehensive that I don't want to get into it today. So hopefully I have time to get into it tomorrow, just basically on how unprecedented the times we're living in, in terms of markets especially.

and just maybe a framework for how to process what's going on or not because really we don't have any guardrails. We don't have any historical precedents for what is going on, and that is, I think, an important thing to keep in mind at all times. To the nitty-gritty, we had a slightly soft session in the U.S. yesterday. It really is just the U.S. that's a bit off. We had a record high in the DAX, for example, in Europe.

Our opening a bit softer, U.S. futures down a bit overnight, Europe opening a bit softer today. I think we're all waiting for, you know, what is it we're waiting for? And that is this quote unquote big, beautiful bill.

the bill that is trying to make its way through the House. They're trying to get this passed by Memorial Day, which is on Monday. So the clock is running out if that's what we're aiming for. If the broad outlines of this bill survive, it is, again, guaranteeing these deficits. And really the key market here, as we've emphasized perhaps too many times, so we can't emphasize it enough, really, is the U.S. Treasury market. And it does feel like that Treasury market is just a cat that's ready to pounce.

Or is it? I mean, that's the setup here. Is it a cap that's ready to pounce as soon as this bill is passed? And when I mean pounce, does that mean the bond vigilantes sell in a big way? And we're at these key round levels, the 10-year at 4.5%, the 30-year at the 5% level. We even have a 20-year auction from the Treasury up today, and that 20-year spot on the yield curve is kind of an oddball one and tends to be

less popular. So the yield curve is actually higher there at that. There's a little bump on it at 20 years, and it's actually traded a bit more above 5% than the 30-year has in recent days. So that is the critical backdrop. Meanwhile, I think other

indicators are sort of flashing red or making noise or flashing green, whatever your perspective is. We have Bitcoin really, I think, poking towards the highs of the cycle. You can't see why. This is not just going to blast to new highs. That's not a recommendation, just an observation.

And we see that coming into view. We're well above 107 the last time I saw it. The high is something like 109 spot to five or nine or something like that. So keep an eye on that. That has been an excellent indicator on where risk sentiment and liquidity is looking at. We have that very strong gold rebound, at least in U.S. dollar terms. We'll have Ola on tomorrow on commodities also talking about not just that, but platinum, which really saw a remarkable move yesterday.

And we can't help but wonder, we've had some really ugly false starts with silver attempting to the upside. Is it going to be silver's turn at some point? That has been a really frustrating one there. But if we're all supposed to be selling U.S. dollars because of the risk of financial repression and at some point, and intervention, for example, to keep these treasury yields from going too high, then hard assets will, should anyway, see their day at some point.

And on that note, by the way, so we have the – I talked about the U.S. Treasuries being potentially ready to pounce. Let's look at the Japanese government bond market. I believe I mentioned it yesterday, but just exploding higher at the long end of the curve there. 20-year traded at the highest since 2030 or the highest basically since that 30-year Japanese government bond was introduced back in the late 90s. There was an interesting tweet that I retweeted from –

I think it was James Aitken. Apologies if I got the first name wrong there. Aitken Advisors on X. He sent a clipping of a 1987 article, some company called Tateho that was engaged in some kind of dodgy financial speculation on the side that ended up costing it more than basically its revenues for the quarter.

And a practice which even has a name in Japan called Zytec, which is basically engaging in these shenanigans on the side to sort of boost returns. And I guess we're supposed to infer from this ex-post that some of that instability at the long end in Japan could be somebody, a whale or otherwise, in some kind of trouble out there. I don't know. That's just a speculation and an interesting tweet from somebody. It's a very interesting tweet.

observer of financial markets, I do know that we need to pay attention to the Japanese yields out there because I can't imagine that they're allowed to continue to spike higher at this pace we've seen lately without some form of intervention. And it's almost like you have the U.S. and Japan in some kind of race to see who has to intervene in their bond market first.

One sign of stability in Japan is that that 10-year, which is perhaps more important to the relative size of the market than 10 years, et cetera, has stayed within the range of the yield we saw, the yield high we saw back in March. So just something to keep an eye on for if you're trading yen. So far, it has not fed into any sort of yen instability. The yen is sort of trading on par or flattish with some of the other major currencies that

having come back a little bit there after some recent weakness. Even as dollar-yen has gone back lower and, again, further cementing the sense that we've seen the top there in dollar-yen here locally on this squeeze and are focusing on that gigantic 140 level. As well, another dollar weakness move, weakening dollar move overnight, and the euro-dollar trading back above 113. I think as long as we hold above, let's say, 112.50 here today and tomorrow,

That has reestablished the dollar bear trend. And again, what is going to be the whole sort of cluster of reactions once this big, beautiful bill passes? Does it mean we get a U.S. yield spike nominally? Nominally, again, supposedly U.S. dollar positive. Hey, higher rates, hooray. But this is a different market. We've seen times when those U.S. Treasury yields spiking.

is a sign of concerns about the stability of the U.S. fiscal picture. It is an emerging market-style spike in terms of its nature if the implication is that it's due to lack of trust in the market rather than due to the, of course, some kind of pro-cyclical yielded higher because growth prospects are higher type of trade.

And as I've iterated here so many times, the ceiling for yields may be rather low in terms of the tolerance and need for the U.S. Treasury and or Fed to come in and provide some kind of intervention. So that's what we're looking for here and I think is really the critical next step. It could be some sort of beginning of this, all of this, as we head into Monday and that Memorial Day headline supposedly for this bill.

And interesting to see, again, other indicators are sort of galloping ahead. We've got Bitcoin doing what it's doing. We've got the dollar already weakening possibly in anticipation of this, whereas U.S. treasuries are perhaps a bit slower because it's slightly more institutional money. Not sure there, but that's what we're watching for next. Another little news item is Australia.

I found this a very interesting piece of political news, liberal national coalition breaking up. So essentially you've got the end of the two party system in Australia for the first time in, I guess it's a couple of decades. I think I read interesting developments in politics that just continue to, you know, rebound around the world. Okay. So as we look forward to today and through the end of this week and into next week, if there is some kind of something unsettling going and we turn into proper risk off, which we've not really seen so far,

Again, the sort of pivotal levels on the S&P cash, 55.87 to 57.87, I outlined the rationale behind that in yesterday's podcast. And I would say the NASDAQ 100 is a bit more straightforward, a bit tighter in percentage terms. 20.250 is a really key area on the cash NASDAQ 100 index and the 20,000 psychological level just below that. So

We'll be watching that, and we'll be watching for what happens next, but we'll be back tomorrow with a longer version of the Saxo Market Call.