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Epic Bond Rout Leads To Biggest Weekly Percentage Surge In 5 Year Yield In History
As the table below demonstrates, the bond vigilantes are now eviscerating the belly of the US Treasury curve: the weekly percentage move higher in the 5 Year yield is now the largest...Ever. For those wondering if PIIGS should be renamed to PIIS following the brief rescue of G, perhaps it is time to officially rename it PIISA.
The chart below is an archive picture of what one day will be seen as officially ushering in QE 3. As for the naive follow on moves in the equities, it is merely a risk transfer.
As for the statistical evidence, courtesy of John Lohman, it speaks for itself. This week's move wider is the biggest percentage move ever.
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Ever, bitchezzz!!!
seriously ZH ?
you don't measure bond moves in yield. it was a 1.83% sell-off in price.
wow, what a rout.
You do realize that 45 bips over 5 years is 1.24% right?
Or were you joking?
2 year's been pretty fuggalicious as well.
Cash for gold?
Is Bernankes' oatmeal getting cold again?
hahah +1
Obummer's tryin to win friends on Wall St. Donations bitchez!
Does this surprise any ZH reader ?
I think not.
We knew this, but it is nice to see it documented for the public.
surprises me. china has come out and stated the will prop up europe and lend to any struggling countries. surely they wouldn't do it to the detriment of the u.s.
LOL!!
Paging sheep dog, paging sheep dog, lost sheep on aisle 13, need assistance STAT. Rut Roh.
Surely China isn't upset about us blowing up/locking them out of 10 billion plus in investments in Libya they had ongoing. Right?
Just getting started?
So what does this indicate? Does it mean that interest rates at banks will go up? Does it indicate that PM or other commodity prices should go up or down?
the Empire continues to crumble..
It means BPGSFAYC .... buy as much physical gold and silver as you can as fast as you can while its still available at these relatively low prices considering the tsunami of paper flooding the world.
It indicates that when the money spigot is turned off, interest rates rise quickly. The banksters doth protest, turn the printers back on.
Since only the biggest banks in the US control the spigot and since the spigot has been turned down, the banksters you indicate who are protesting, must be banksters outside the circle of trust. The fat cats control the spigot. Everyone else is on their own.
QE can never end
we all knew this...but what we don´t know is how much??? its 29.71% this week...but will it be 297.1% in one month????? That my boys is what makes me drink.....and cry as I watch gold and silver getting hit hard...
Will we see the yield at 10 in short order then QE-steriods ?
"As for the naive follow on moves in the equities, it is merely a risk transfer."
A "risk transfer" that leads to what, exactly? Please, go a little further...
hey, don't junk the man for asking questions....
anyone buying equities is a soon to be shorn sheep.
risk transfer=bag holder
Why isn't TBT surging? Why are the PM's down? We're being bamboooziled! Where is the deer in the headlights? Because that is what is happening to us
You expect rationality in phony markets? Phony PM paper prices are down, meaning you have yet another chance to exchange failing fait for real money. Get out of all paper, stop trading, starve the beast and, of course, buy as much PM as you can as fast as you can.
Guess china had enough
No problem. The government's exploding cost of servicing its debt is just offset by all the capital gains taxes from everyone cashing in equities.
Algos DO pay taxes don't they?
On equity capital gains? Not if they are foreign nationals.
ssp2s, you just gave me a "light bulb over head, suddenly illuminating" moment.
Thanks.
Meanwhile paper silver price slides to $33.37/oz.
waiting for the 200 dma for a quick trade.
Oversold, big-time. Buy it.
In a few weeks, reality will set in---QE and fiscal austerity will soon begin. Breakevens will collapse, and so will yields.
It happened in 2010 (remember, yields didn't collapse until about a month after QE1 ended). The same thing will happen in 2011.
Agreed.
It happened in 2008, and surging yields quickly choked the economy.
Well, by "quickly", a couple of months later.
I thought the whole point of QE was to keep austerity at bay...How/why would both happen concurrently?
Anyone else hear John Williams' Jaws score in the background?
http://www.youtube.com/watch?v=yJzii_dIkG0&feature=related
I hear this John Williams:
"
According to John Williams of Shadow Government Statistics, if the U.S. government used GAAP accounting principles the "real" U.S. government budget deficit each year would be somewhere in the neighborhood of 5 trillion dollars. Williams believes that the U.S. government is essentially bankrupt and that our current system is not anywhere close to sustainable....
http://www.benzinga.com/11/07/1219088/will-barack-obama-use-the-14th-ame...
and
"John Williams at ShadowStats.com still runs the numbers the way they were in those bygone days. Let’s recalculate…
22.3% unemployment + 11.2% consumer price index = 33.5% misery index
That compares to a peak misery index of 22.0% in June 1980."
http://blogs.forbes.com/greatspeculations/2011/06/22/the-return-of-the-m...
Risk transfer out of bonds, into equities?
http://www.youtube.com/watch?v=hapSI_TOgTk
I guess THIS is what Bernutty meant by ending inflation in 15 minutes...
Geithner's replacement is going to have to deal with a sh*tstorm of debt obligations.
It's baked in. Playing brinksmanship in Warshington with the "debt ceiling" for a few more weeks while they do some maintenance work on the printer arrays. QE3 rolls out shortly after an "agreement" is reached.
The chaos caused by all of this will amplify the inflationary impacts of printing as it becomes impossible for producers of real stuff to plan production with any significant lead time.
+ that
Why does anyone think Geithner is leaving? He's running down the ratlines, folks, ahead of the pack.
He is not going anywhere. Just another in a long line of rumors, with many more to come, I'm sure.
No way Obummer puts up a new T.Sec. for Senate confirmation between now and the election. Period, end of story. Timmy could be caught naked in bed with 2 sheep and doberman & would still stay on through 2012.
No doubt the sheep and Doberman would recant after it was revealed they'd rec'd $100k each from a drug dealer.
+10!
He has direct orders from Goldman NOT to speak to hotel maids.
Do you actually think there are a couple of sheep or a Doberman that would stoop so low ?
If we want this market to go down, then we all have to get in now. Don't you see, that's the only way this is gonna work. We need to give the bankers a good deal when they come to rape us. Everybody! take your clothes off too and tossed them into the ring.
I thought the US was at its debt limit. How are Treasuries still being issued?
Looting the Feral slugs luxurious pension plans by issuing IOU's. Those coffers will be refilled when the loot limit is increased.
By looting public pension funds.
Treasury Continues To Dip Into Retirement Accounts, Prepares To "Take Out" $66 Billion Chunk To Make Room For New Bond Issuance:http://www.zerohedge.com/article/treasury-continues-dip-retirement-accou...
Old treasurys mature all the time; if they are replaced, the total debt outstanding doesn't go up...
Thanks, much appreciated.
Thanks, much appreciated.
Rollover, until you can't...
"---------full faith and credit of----"
But I must admit I had no idea about the 14th amendment being the basis for 'general obligation' and 'full faith and credit'.
I wonder how the Supreme Couirt will rule?
(just joking)
what the f is going on??? i'm getting killed. Vix back down to zero?
Seasonality. If you're trying to short spx, take a vacation and come back end of next week.
There's no one in the market, dude
A rate rise and people are surprised cash is running to corporate equity; imagine when cash runs into corporate debt ahead of Treasurie debt; imagine when cash runs into gold ahead of all else. The dollar is not a safe haven, I repeat, the dollar is not a safe haven.
I started transferring mine last month, a little bit each week, mostly to shorten duration and avoid this mini bubble in the belly of the curve. They can QE all they want, even the Fed with Goldman's help can't prop it up forever.
Corporate debt will be the trade of the (next) decade, behind physical PM. As US Ts lose their safe haven status, and money decides not to run to fiat, the corporate bond spread will crush government bonds. This is a corporate takeover, after all. That is why the governments were ok bailing out corporations. Governments were sacrificed at the fascist alter so that corporations could rule the day.
I'm wondering if we will ever get the long anticipated pre QE3 drop in equities.
My shorts are getting killed.
you wont get that. get the fu*k out of shorts. I have been warning for the past weeks.
Wait for it. Even though the collapse will be rapid, you don't have to catch it at the top. It will be a steep drop down, so plenty of money to be made once it starts.
The default thinking for surging yields is that the economy is moving and risk is on. But this surge is happening only because QE2 has stopped and the demand for Treasurys accordingly has diminished. The surging yields soon will collapse the equity market unless Ben steps in again. But I think Ben has to let the equity market collapse before he can justify more QE.
We already had the post qe2 drop in equities.
The pre qe3 drop in equities will occur shortly after the announcement of qe3
We already had the post qe2 drop in equities.
?
Partly tongue in cheek.
Keep in mind the market is constantly attemting to anticipate and discount the future.
You are red meat for the big boys. Helpless. Of course your fundamentals are correct, the the market is a fleecing machine, a wealth extracting machine, period. PERIOD. YOU WILL NOT MAKE MONEY TRADING GET OUT.
stocks will take a tumble next week and while everyones talking about that silver and gold will get hammered
we saw this play not so long ago
Are you putting your money where your mouth is, shorting or selling PMs? I doubt it.
short stocks, but if i had capital to spare would think about shorting PMs or oil
i expected the bounce to fade today, I'm really screwed today
Gold mining stocks have already discounted the volatility in gold metal prices and are very oversold. One just has to look at the 20cent rise in Kinross vs the 18 dollar drop in gold as just one example in today's trading. I for one will be buying pm miners in the next few weeks.
Got to be neither. Cash ready for a buy up in silver, long oil.
i just saying that this looks like the perfect setup to take down the commodity complex while everyone's looking at the decline in stocks, which would fit in perfectly with QE3
but i admit, i know nothing, just guessing
Paper price can get as hammered as it wants...just more decoupling from the physical!
Comex price doesn't reflect what ZH holders would take to part with Au or Ag.
:D
Which asset class has performed the worst this week?
Gold and Silver?
Bonds?
Agriculture?
Tough Call......
must be a slow day processing 1099's.
btw: is this a question you came up with? or did you lift it from somebody else?
h/t itg.
Apart from Greece, which has had more stupid money inflow this week?
Gold and Silver?
Bonds?
Agriculture?
or EQUITIES?
Take your time...
I'm with stupid
Step back from the mirror, TCT.
Momo, tell me again about the insatiable desire for gov paper, rates will never rise...You are the perfect fade, momo.
MomoFader, the ultimate contrary indicator and dumb money call.
if anyone has money, they should load up on Gold now and continue for a week.
stocks also will be great.
first sentence logic...check
second sentence logic...er...umm...anybody? anybody? Bueller? Bueller?
stocks will do great until they don't. party on... just stay near the exit.
Casino doors already chained shut from the outside. Uh oh.
Stocks : dollar tsunami coming back to USA. tech stocks should do good to pay for those dollar coming back to home. high inflation. New scenario : Gold > Oil, silver,Grains > stocks > real estate > bonds,dollar .
Nice Gold chart :
http://stockcharts.com/h-sc/ui?s=$GOLD&p=W&b=5&g=0&id=p28385840989
if anyone having rights for posting pictures, please post it for all to see.
Feeling like crap cause you were long the 5yr? Well the Dr has a prescription, and not it is not cowbell (at least not this time), rather it is shaking your ass.
Endless Summer (a playlist):
http://www.youtube.com/playlist?list=PL96C1432070AB1B50
oontz oontz
Ahh, weekend listening. Thanks Steak.
How stable do you think the foundation of the leaning tower of PIISA is?
I doubt this is a sign of more to come - the ISM was a major disappointment to the bond bulls (and the reality based who know there is no recovery). While I don't know... this seems to smack more of the unwinding of a position rather than a 'sign of things to come'.
If it was truly a sign of things to come, we'd see the economy starting to crumble.. its not (on the surface).
Nope - I'd say these dips on the UST 5 year are to be bought.. and (unfortunately) so is Robo's basket of LULU, Netflix, etc... also gold and silver.
Then you wait for the truth about the economy to reveal itself.. (and of course QE^n )
So when the coerced money comes gushing back in to rescue the Ts, what happens to MoMofader's equities?
(I hope the banksters have got their holiday schedules straight so that both traders propping up the SPX aren't out on the same day...)
that will be about the time they announce the tax holiday on overseas cash..
don't get me wrong.. this market run is melting my brain.. and adding to my booze bill each month. reality will kick in at some point.. just trying to figure out 'when'.
Perfect correction in Au ! Shaking out all of the lemmings....
$18/oz is a shakedown? C'mon. Most of the weak hands were sidelined in the mega-raids two months back. This is noise.
I just keep accumulating in lots of about $5-$10K.
Engineered to have all the FOX news watchers sell everything since on June 30 "all the banks will collapse without QE life support"
Just a very predictable move by "the herd" out of bonds and into equities driven by the end of QE 2.
IMHO, it would be a big mistake to make anything more out of this. Once a debt ceiling/deficit-reduction deal is announced, Treasuries will start to get the love again. Right at about the same time that equity indices are at or approaching new highs for the year. Rinse and repeat.
I am thinking that as long as there is a reasonable expectation that the US will be able to service its debt, paper gold will be declining in price as treasury yields increase.
... again, when yields get high enough, the temporary flow into equities will stop, money will move to treasuries for the yield and stock will take a mighty beating.
If the dollar survives all the political turmoil and the government shrinks the deficit then gold may very well revert to the mean.
That's a lot of "ifs."
Like many others have said before, just tell yourself that the Fed and central banks of the world are doing this INTENTIONALLY. Bernanke WANTS to destroy the US economy and US dollar...See? It all makes total sense.
What we don`t know is exactly how much power the US Fed has to manipulate things.
They sure do a good job with Gold and Silver and the miners.
The Fed has 2 powers...
i). a monopoly on money
ii). first option on the US Govts great power, the income stream robbing citizens (taxation)
(strip away the window dressing and both are systemic criminal activity)
the only quiz question The Fed has to answer every month is, "To Print or Not to Print, that is the Question?"
Any nonsense about the Fed setting interest rates, check out the 3 Year Bond set by the market, the Fed follows it like a nodding donkey (Greenspan admitted it many years ago)
For Gold and Silver power, that'll be criminals for decades, never jailed once for decades: JP Morgan et al
Do not fight Uncle Gorilla and his Gatling Gun that obliterates all the longs over the COMEX by firing off "short gold at market" paper contracts.
I warned you guys that "Paper" rules over "Physical" in today's world.
Until a hedge fund or foreign country sacks up and decides to take delivery of the entire COMEX inventory, Uncle Gorilla will continue his games.
by "Uncle Gorilla" you mean The Fed?
You think the Fed is capable of manipulation (thought)? With Dull Boy Benny at the helm?!!
You're 'avin a larf Son!
JP Morgan created The Fed. The Fed is duller than dishwater and is manned by human zombies (crones) to do their precise bidding. Greenspan never had an original thought in his life, a perfect CV for a JPM Goldman Sucks plant. And Benny has never had any thought in his life! ...he says and does exactly what he's told to say and do
It's the oldest cartel/monopoly/front in US history
"..wondering if PIIGS should be renamed to PIIS.. perhaps.. PIISA"
perhaps the Leaning Tower of PIISA
...Timber!!!!
No.
When you add Turkey and Hungary to the PIIGS, you get "PIG SHIT".
;) Excellent ...i'm all out of ideas, but please keep 'em rolling in. . .
+1
Funniest comment I've read all day.
Here's a question I wanted to float to you fellow ZHers.
A lot of people tend to believe that when equities begin to get hammered, that PM's will follow down. I'm not so sure.
With registered silver at COMEX dropping daily, if silver drops too far, too fast, I think that would officially lead to COMEX defaulting. That's the last thing that the establishment wants.
I think silver and gold will trade sideways with downward momentum, but if silver dropped sub-30 to mid 20's I'd be shocked.
Anyone agree?
Paper PM's will continue decoupling from physical pricing. Who would pay for paper when the underlying asset cannot be delivered? I really don't see Ag trading sub $30 ever again. If I had the FRN's, I'd gladly trade my fiat into each silver price drop. However, if some magical event occurred and COMEX started registering more silver, than was being delivered, paper should soar.
I 100 percent agree.
I think watching silver specifically tells you precisely what's actually going on in the global economy.
Silver is still treated primarily as a consumable metal like copper. What did we learn this week? The global economy is slowing, so demand for silver should theoretically drop. Yet today, the stock market is jumping up yet silver is dropping.
TD and everyone on ZH is right. This stock market rally is ENTIRELY based on risk.
i'm thinking that the window of oppertunity to smash PMs is rapidly closing as you point out. which is why i have a feeling that it will be done next week under the cove of a decline in stocks, but as i have pointed out before "i know nothing" feel free to jeer at me if it turns out i'm wrong
You're not Roninson Crusoe about just guessing. There are a few in the know, the rest of us are all barking and chasing at car tires.
With LNKD over 1,000 P/E again, I'm tempted to liquidate all assets and go full MOMO to front-run the bond exodus into social media stawks. /sarc
10 years still above 3%:
http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/
Shiller predicts they will fall below 3%. We'll see. Fear and uncertainty drive the Big Billionaire investors into what they consider "safe"...
Post QE2 Game Plan:
1: Go "ALL IN" as if the end of QE2 or that bond spreads are about explode like a supernova really does not matter.
2: PIIG Out on "Independence Day", stuffing your face with barbecue and playing lots of Mexican Train cuz that is the loudest sound you will hear the night of the 4th if you live in Minnesota.
3: The 5th of July, the Party Continues...until...it doesn't
4: Blackhole of wealth destruction, vicious cycle debt wipeouts, collective action clauses, CDS payouts...lamentation, wailing, war, intense nationalism, complete loss of all hope, capitulation to reality...crickets.
5: The largest transfer of wealth in the history of the world complete. You got what you got. What did you get?
6: New Game: Accumulation
In the meantime the name of the game is "WTBO": Wait The Bastards Out!!!
Just don't forget that someone has to pay for all that money printing and that hasn't even been considered yet.
We are just hopping from one crisis to another and when the "all clear" has been sounded, the economy turns around and employment improves THEN you will see an epic crash....simply because it will make no sense at all...
Just don't forget that someone has to pay for all that money printing and that hasn't even been considered yet. We are just hopping from one crisis to another and when the "all clear" has been sounded, the economy turns around and employment improves THEN you will see an epic crash....simply because it will make no sense at all...
Do a Scooby-Doo flashback to before 2008...who would have thought we'd ever be talking about a rout all the back to a 1.82 in 5s? It's a crazy fucked up world we live in.
Only cost us $28 trillion to get this 'great bull market' of DOW 12,000 something....and we're celebrating. What a stupid fucked up world.
go back to october 2008 and imagine what the dow would have been had it been announced that the Government would run an accumulated deficit for the next three years of 5 trillion dollars (financed by the Fed) that all marked to market on loans would be abolished and that 44 million would get their food via stamps
http://www.youtube.com/watch?v=__VQX2Xn7tI&playnext=1&list=PLEFB46A42462...
How hard is it to understand? Collapsing bond market = Buy real assets
Lol @ the lemmings selling bonds to buy equities. Wall street has done a great job "selling" the idea that equities hedge against inflation.
This is just ridiculous. That very chart shows it was higher back in May, and what came of that? I'm a complete doomer, I know the global economy is headed for collapse in the medium term, but tyler is the boy who keeps crying wolf. For example, his talk about SHIBOR. It wasn't too long ago he was "confident this all time high will be taken out in a few days", and since he wrote that it's gone down every single day, except for one. And that one day he was all talking about how the downward trend was broken, but then it went down again. Of course, ultimately doom is coming, but the specific indicators and warnings he points to are usually meaningless.
Check the "Traffic Rank - Max" at this site -
http://www.alexa.com/siteinfo/zerohedge.com
Tyler's not dumb. And in the final analysis the system is not sustainable, so he's going to be right eventually. But, TD calls about 9 out of every 6 indicators of the coming crash. The 6 are still worth reading.
Of course he'll be right eventually, that's what I said. There'll be many huge drops along the way in the process of collapse, so there'll be a ton of chances for him to be right. But maybe he should employ some perspective. I don't know about 9 for every 6, I'll let you do the count, but in the short time I've been reading here it's been mostly hubris.
The second the old people can get a decent savings account interest rate, kiss gold goodbye as the money is pulled out of that falling overpriced commodity and put into savings.
Try searching "negative real interest rates" and let me know when CDs yield north of 8% and I will join you.
The second the old people can get a decent savings account interest rate, kiss the current government of the US goodbye as they can no longer make their finances work without killing the buck.
Since DOW/SP500 is now EXTREMELY overbought, the reaction next week should result in a significant retracement.
S&P500 daily charts show updated rising wedge and possible head and shoulders pattern with target of 1,150 when confirmed.
http://stockmarket618.wordpress.com