Beware: Treasury Expected to Borrow $1 Trillion Monday

Why Yellen's QRA Could be Key for Gold

Bottom Line:

This week is a big one including an FOMC announcement. Something equally big on the Treasury side is also due this week; The Treasury’s Quarterly Refunding Announcement (QRA) is made. In the past these were not that exciting. But, given the fiscal dominance propping the economy and the deficit spending it invites, this is now very important.

How important? The Bond and Stock rally from November 1 to Dec 31 were in large part a result of Yellen’s last QRA announcement. Michael Hartnett notes that in his most recent Flow Show report below. First Hartnett told us what was behind the November and December Bond rally:

From Hartnett: Gold Inflows are Back, "Baby Bubble" Thesis Update

Oct 30th Q4 US Treasury QRA (Quarterly Refunding Announcement… $776bn vs consensus was $852bn) was the catalyst for epic Wall St rally… yields sank from 5% to 4%, SPX 4.1k to 4.8k…

Here is what happened back then to Bonds, Stocks, and Gold

Bonds stopped cratering, then ramped higher the rest of the year…