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At 281 bps, 2s10s Hit Another All Time Record Wide
Somewhere Julian Robertson is convulsing in a fit of lucre-driven epilepsy. The question for today: what is the bigger pain trade - an outright stock short, or a UST flattener? Everyone knows one shouldn't go against the Fed, however the Fed is behind both of these... So where will it crack first?
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Heh-heh... you said "crack", Tyler...
:-)
"Bond" Tyler is the hard core one .....
Looks like gold is seriously correcting.
First resistance at 1,114, second at 1,072. Below that.........
It's going to $900
What are the gold and silver next targets. Where are the gold analysts.
$1021 and $16 according to my dumb charting methods.
$1014 is the floor, IMHO. We should transition into a range bound move between $1020-$1080, consolidate then move past $1380 and $1500.
Because if they don't monetize, the U.S. economy dies.
IDK but the S&P to Gold ratio has been on fire lately. If I could trade it I would buy it. The 1 resistance seems to have been broken today. If the ratio continues to rise in a stagflationary environment then I would say that gold might not be the wisest investment for the short term. Long term though, it is still a buy, as long as you are paying in dollars and pounds.
there is a lot more money parked in the front end of the curve than in stocks - bear flattener
For a little history:
http://www.bloomberg.com/apps/cbuilder?ticker1=USYC2Y10%3AIND
http://pragcap.com/the-guru-outlook-hedge-fund-master-julian-robertson
Damn, its finally happened...steepest yield curve EVER. real shame Santelli was off today. If the question is how far the Fed will go to prop up the banks at the expense of everything else in the economy, we have our answer today.
As one astute market oberserver phrased as... "The Piggy Banker Spread". Yep... it's higher than ever.
When granny wonders where her 0% return is going, just tell her that banks are converting that "savings" into an asset that pays the banker almost 4%.
The Fed may even go as far as ignoring positive inflation numbers, as long at the bond market plays along. And so far, the bond market is playing along... except at the long end of the curve. That works ok for the bankers...
TED spread, who ??
silly IG / bond markets, doncha know that equities are for kids ?
ARM resets are going to be a bitch next spring if they don't get this sucker flattened out and FAST.....
hey idiot... ARMs reset to floating.
i hope you were being sarcastic. "ARM reset" worries are sooo 2005.
By their very nature, youd be right in assuming ARMs are (almost) all floating.
But some were issues and re-issued to be used in swaps where the ARM ended up being converted into fixed, kind of like an x-yr cpn bond.
Exactly. They are not all floating. But hey, we have some who know everything. Thanks for saving me the time to reply to Jim Cramer.
Dipshit. Not all were floating. Perhaps you should actually research some things before hiding behind the Anonymous name Mr. Cramer.
This is getting out of hand...we cannot afford any more failures.
So....wait for it . . . . Tiger needs to become a banker's golf ball cupping...er...holding company (Tiger Woody Holding Company?) and receive taxpayer funds, so he can go on screwing the public...at least the golf spectating public...the golfing economy cannot survive unless more new public screwing occurs. Bail Out Tiger Woody!
It will be interesting to see millions of
people come off unemployment benefits in 2010.....that should be fun.
My 2010 prediction:
The Governments worst nightmare......the general public
begins to wake up....and they are PISSED!
So long America, it was nice to know you!
unemployment benefits are soma.
they will continue through 2010.
if in doubt, check the Democratic Party mid term election calendar. yep, November 2010.
Excellent.
oh billy
the widest this spread ever been in case of japan was in early 1996. japanese gdp reached its peak in 1997 and by 2000 japanese bank market capitalization took about 80% hit.
So short term cash is in the short end and the bankers are in the long end. Question to you credit market mavens: if the long end of the yield curve really deteriorates, won't the banks 4% yield pale in comparison to the loss in price of the bonds if they have to sell? I mean, I can buy TLT and earn 4%. But I bet I lose 10% in a year or two when I sell.
That and the enormous cost of servicing our national debt are two reasons the Fed can't increase interest rates for a long, long time?
you could make 10% in a year or 2 when you sell.
that plus 4% annual carry for two years = 9% annual yield, vs 0-25 bps in the short end.
so at around 4%, I'll lever into 10-yr swaps.
The one certainty is that Helicopter Ben is creating chaos and froth in the markets while torturing savers with his zero interest rates. He's really a terrorist at worst and a fucking liar at best.
I hope Santa sticks a bread knife in his throat... (sorry Marla, but this hope you have for legal justice is too much to let go)
This will continue until the public figures out how badly the 10-2 spread is skrewing them...and that has to happen after the public figures out how the high spread is beneficial to the banks and bad for them...and that has to happen after the public figures out what the 10-2 spread is. It may take a while.
TumblingDice, care to explain to the financially-challenged why the huge difference in the spread screws the little guy? I'm serious, I really want to know.
The government gets the lowest rates for all borrowing. Its rates more or less determine the fundamental credit conditions for the rest of the country.
The primary (and severely oversimplified) business model for banks is to borrow short term and to lend long term. Usually in times of low inflation, or low expected inflation, which many people consider to be similar or even congruent variables, the spread between the costs of short term borrowing and the revenue from long term lending is low, so the profit that the banks make is relatively low as well. Similarly, working class people pay less in terms of the lost value of their fixed income wages that occurs during inflation.
Now, apparently, expected inflation is high; there is an unprecedented discount for future money compared to present money. Either that or there is weariness around the investing community to give the government money for too long of a time period because there might be fear of a possible default. Whatever the case, this allows the banks to execute their business model in the best credit conditions available, while at the same time making the working class pay for it with the loss of the value of its wages.
Another way to explain it is that one is that banks serve as middlemen for money, and the amount they get to pocket for every new debt backed dollar created is a derivative of this spread. Not only is there a record amount of new debt, and hence dollars, being created but also the spread on it is highest on record.
On the other hand, a lot of this new money is going to recapitalize the banks so that they can sustain future losses from the bad loans that triggered this crisis in the first place that are being covered up now. I would explain further but I have to run. If I were you I would not take my word for it and do further research. This spread is the heart of the credit market.
more simple than that....banks paying you+-0 and getting 4% or more on your money.