Postcards: Is This The Next Speed Bump for U.S. Markets in October?

There's an issue building the banking system that might do just enough to spook everyone once again because of social media and worries about liquidity elsewhere.

Dear Fellow Expat:

On Friday, I discussed the ongoing risks in China.

Things aren’t going well for the Ol’ Tiger.

It’s starting to feel like the “Alligator’s got him by the Tale.”

This means we’re ahead of the narrative before others start paying attention.

However, I don’t want to overlook a short-term risk in the United States. Something’s building in the financial sector - and I just want you to know about it before the Holiday weekend.

New FDIC data shows that a giant riptide could soon form in the banking sector. The Federal Reserve will need to delicately balance this challenge.

Come October, roughly $950 billion will become due in term deposits (see Certificate of Deposits or CDs) at U.S. banks.

Most banks have started communicating with their CD customers that they need to decide if they want to roll over the CD for the next six to 12 months. However, these rates are typically much lower than the current money market rate of 5%.

Customers might shop around with their money, pr…