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Bear Curve Flattening In Europe - Two More European Bond Auctions Come At Higher Yields, Lower Bids To Cover
Two more European auctions have closed at terms that show continued deterioration in sovereign demand conditions. Earlier, Italy auctioned off €7.5 billion in one year BOT (bills) at a yield of 1.399% and a 1.659 bid to cover. This compares to the precious auction that closed at 1.377% and a 2.359 BTC. Elsewhere, the German government had to retain 15%, or €807 million, of a €5 billion 6 month bubill issue to "sell" as much as had been hoped for. The issue came at a 1.9 bid to cover, excluding the government retention, compared to 2.2 previously, and had to double the yield on the issue from 0.1923% to 0.4226%. Of the €2.153 billion in non-competitive bids were obviously accepted 100%, it is the non-competitive ones that were problematic. It was the 5.765 of competitives that were an issue: just 2 billion of the competitive bids were found to be "acceptable" to the government, meaning €2.8 billion offered rates far too high to be accepted. Is the German curve starting to bear flatten as well?
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Flattening, bitchez
My question is this:
1) Are there no signs of long rates increasing? I understand that a flattening curve indicates recession but are there no inflation fears in Europe? Does this mean the deflationists are correct?
2) In the US, the curve is also flattening (mostly, despite some fluctuations at the longer end). However, that is seen as a flight to safety, not an indication of a slowing economy. Which interpretation is correct?
Thanks in advance for you thoughts. Like most here, I am out of the casino and (mostly) in bonds. Barrons lead article was "Beware Bond Funds" this weekend, warning you out of muni's (agree) and long bonds (also agree).
With stock market rigged and bond market dangerous, where do you invest? (I can't do physical gold or silver in any meaningful way because of the quantity involved and I don't really trust GLD or the like because who knows if they really have the gold?)
I know this isn't an investment advice site but I am interested if anyone has reached any conclusions. I am thinking that the dollar may have a bounce and that will be a signal to get money out of cash, but where to put it?
Oh, and while someone is answering these simple questions, could they have a shot at
1) the meaning of life.
2) Does god exist.
Ps. My moneys on deflation for the time being. Money velocity is down to a crawl.
Biflation is the new black!
Some years, zero return is good.
If you dont have the size to convert $ to PM's, then just put it in your pocket. Keep it there. If you get more cash over the next few years, accumulate PMs. I think you will sleep soundly at night, and you can sit back and watch the fireworks.
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The treasury yield curve here in Australia is not that far from inverting.
But Australia just announced that their best export buyer is doing great and growing even better.
Updated DOW charts etc.
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
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