Goldman's Jim O'Neill On The Consequences Of The 10 Year Hitting 5%

Tyler Durden's picture

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asdasmos's picture

Burn, baby, burn.

Eternal Student's picture

He's certainly burning something, and I caught a whiff of it. Woof. That's some strong hopium. Now if you'll excuse me, I need to step outside and let my head clear.

Herd Redirection Committee's picture

I liked his suggestion that somehow Quantitative Easing will come to an end because it is politically unpopular!

This is basically Goldman Sachs trying to convince us "No no, its not a small Oligarchy that is running things, its the free market that decided interest rates will go up, and if the people disagree with the Fed's policies like QE2, the Fed will listen!"

Yeah f*cking right!  The illusion of democracy is all that remains, so good luck GS, on maintaining it!

Check out our latest PsychoNews story: "The Calm Before the Storm"

"In other news, the Bank of Canada announced its intentions to devalue the Canadian dollar.  It is America's fault, naturally.  Canada did not want to devalue, but for the 'good of all Canadians' it will.  This is exactly why PsychoNews was founded, because Central Bankers are constantly making decisions which they purport to be in the best interests of everyone involved, while actually only being in the best interests of a small financial elite."

tgatliff's picture

I loved his "no one will ever know"... It certainly cannot be that foreign capital is rushing away from the worlds reserve currency.. No, I mean no one would know if that happened.  Nope.. Nothing to see here.. Move along.. Move along...


In short, were screwed and he knows it...

deez nutz's picture

if only most American knew how much benefit Canadian businesses received from a weaker dollar.  Can you imagine having a 20% price advantage over your competition? 

Beggar they neighbor.

IQ 145's picture

 World GDP growth might exceed 5%? WTF.? What a wingnut.

Drag Racer's picture


ha ha, you've been listening to our presydend

RobotTrader's picture

Did bonds finally bottom out Thursday?

liberal sodomy's picture

The bottom corresponds to the tic with bill gross implying that he will be selling bonds and buying equities.

edwardscpa's picture

Since when did Gross become a top-ticker?

Lionhead's picture

No, you're confusing true supply/demand sentiment with FED POMO operations that distort any true reality in the UST market. You know better than that.... Any countertrend rally enables the shorts to reload at higher levels.

taraxias's picture

No, sadly, he *doesn't* know better than that.........

Eternal Student's picture

Is it me, or does the POMO game not seem to be doing much? Real Estate is coming apart, stocks are so-so, and JPM has been getting hammered in their efforts to beat down Silver.

It seems like they are in the process of losing control.

penisouraus erecti's picture

More videos like one you posted above.........

gerd's picture

wait, now you're a top/bottom picker and not a trend follower?!

tgatliff's picture

Oh no... FED Super Heros Activate!!  Go super Timmy... Threaten those foreigners with your MAD argument super powers!!  Go super Benny... Hose down with cash anyone who even mentions the idea of abandoning the great cartel...

AR's picture

ROBO  /  As always, we hope you are well.  The other day we posted the following on Bonds (see below).  Bonds will remain a little sloppy and volatile for the next 2-3 weeks, but can retrace some of the 8-10 day recent sell-off (see levels suggested below). Nimble traders can probably trade BOTH sides of this market during this time pulling out 16-32 ticks. In this period, we would not marry oneself to any particular side however (rather trade the ranges the market gives you).  Good luck our friend, as we always find your posts worthwhile and entertaining.---------------------

by AR
Wed, 12/15/2010 - 15:13
#809157   / 
In BONDS  /  Yesterday (On Tuesday 12/14) we suggested the following:

by AR  /  on Tue, 12/14/2010 - 17:03  / #806134 

We might be a little early, but, we suspect this recent down leg in treasuries is close to a short-term bottom. 30's tested our 119.07 support target area today. Thus, it would not be unusual to see 30's bounce and retest the 124.00/125.00 area testing the staying power of the shorts. We've had a quick 8-9 handle move down in the last 10 days. Therefore, the risk here is overstaying one's shorts. This market will give everyone another sell signal from higher levels. It's prudent to peel back some exposure down here if one hasn't already. Good luck everyone.  -------------------------------------

Today (On Wednesday 12/15), again, we just retested these levels (actually 118.21).  There is a lot of "overhead pressure" on this complex right now (which will abate in the next 2-3 weeks). Much of it comes from the fact that few PM's are in the black in this sector after this recent 10 day meltdown of 8-10 handles. If long positions are initiated, do not be afraid to quickly take profits and trade them aggressively until you see some better stability in price levels. 16-32 ticks per day is not unreasonable trading them with this type vol and in this environment.  Short-term risk is down to 117.27 area if these levels are breached in 30's. We are hearing margin departments are being very aggressive this week as the direction (lower) wasn't a surprise, however, the size of the move in this short time period was. Some too may want to look at the calls for the 123 to 125 strike (February or March expiry). Good luck everyone.  --------------------------------------------


chopper read's picture

friday.  temporarily as CME Group raised margin requirements while Fed bought them back up.  desperate one-two punch.  when it crosses through the weekly 21-period moving average and touches the far side bollinger band, then sell the bounce.  if the T-bond goes back to 2010 highs then I'll eat my hat. 

litoralkey's picture

( 19 pct rise in the US stock market ) equals some ( X pct drop in USD )

The US Dollar would have to devalue for the S&P (with 47% of revenues from foreign operations ) to hit 19% gains next year, or the devaluation will be a tightly wound spring that will devalue rapidly... The Bernank said there will be no rapid deval scenario allowed, so a continued USD devaluation in 2011 between 5 % to 10 % is baked into this report.

Sounds more bullish on commodities than equities.


IMHO... any thoughts on this?

hedgeless_horseman's picture

 So at age 19, I found myself sitting on ol' Trigger outside a butcher shop in Belgium, and no money.  If it weren't for my horse, I wouldn't have spent that year in college.

LeBalance's picture

What would happen to real estate with a 10-Year rate of 5%!


Salinger's picture

have you noticed that most pundits while acknowledging that real estate has much more room to drop are also discounting the impact of that deterioration on the wider economy

the thinking goes something like -


things have fallen so far, what's another 10 or 20%

employment in the home building sector has already been hit no more downside

banks have already taken the right downs


sort of like the list of lies from an article a few days ago


Cdad's picture


Exactly!  It is contained.  Who cares if another million people bail on their houses?  To hell with plumbers and electricians...we don't need them anymore.  And we don't need any more copper and that won't affect things over seas.  As well, Average Joe does not need a taste of Wealth Effect. 

None of this will have negative impact on UnicornDew production or PixieDust factories. And nothing matters any more because The Bernank will just print another trillion dollars and jam it into the Blight of America bank. 

So I am with you, brother...sipping some UnicornDew right now, in fact.


Rainman's picture

Yup, I guess he figures a 5% 10y will bottlerocket sales in the housing market and really clear out the massive shadow inventory. Okie-dokey.

SteveNYC's picture

Don't forget the "healthy (Bernanke) gains in real income that we are all experiencing, hand over fist, right now!! Yeah baby!!

lamont cranston's picture

Good God, where did this bozo matriculate - Whatsommatta U.? Sheetrock State Teachers College with grad work at Bob Jones?

So, let me get this right...if the 10 goes to 8 or 10% the market will zoom another 15-25%???

zaphod's picture

Harvard b-school, I think thats were they teach this stuff.

The K-12 schools do a good job of instilling this line of thought also.

liberal sodomy's picture

The ponzi scheme run by goldman at the NYSE can "go up" 19% if the bernank devalues the ponzi dollar by 40%.

That is all.


Spalding_Smailes's picture

Stocks like the ( large money center banks/usa ect ... )C,BAC,JPM,WF---also LVS,MGM .... will go up with the dollar next year.

Book it.

liberal sodomy's picture

Too bad about the avalanche of option arms resets coming due q1 that aren't going to like these higher rates one bit. But that is the point now, isn't it?  Debt as weapon.  The jews' stock in trade.

Problem Is's picture

Hmmm... Modus Operandi of a backdoor bailout program for TBTF banks by increasing revenue/ cash flow by skewering option arm resets?

How deviously clever of you Bernank....

Spalding_Smailes's picture

The big banks will benefit from continued improvement in credit and lower provisioning and charge-offs will be a big boost to earnings. The shadow issues are under the rug/off balance sheet/priced in, gone.

C & BoA will go up 50% in the next 12 months.


Price / eps = deal of a life time with the banks. Buy low, ( blood in the water - sure news is bad ) you will look back in 12-15 months and wish you did.

Id fight Gandhi's picture

Good points. Seems they have no interest in saving this country, just suck it dry and move on.

CrashisOptimistic's picture

Pretty much all such analyses are data mining.

Rates on the 10 year will rise to 5% and reflect strong economy?  But won't a rise of 10 yr instruments to 5% immediately raise mortgage rates and smash even more house buying, lowering house prices and lead more people to choose strategic default?  And doesn't that add more worthless mortgages to bank inventory?

He had 4 different reasons for a rise to 5%, chose one that was glowing, and ensured that one carefully did not address impact on housing.  This is not good analysis.

My guess is the bonds will not surge their rates any further because growth will not manifest itself.  American net worth remains predominantly in their houses and those have rolled south once more in the latest Shiller data.

The one item of strength to think about is how corporate CFOs have aggressively run up debt for their companies at these hyper low rates.  That's the source of their cash.  Where will it go?  Share buybacks, acquisitions and bonuses.  Equities will be supported as unemployment raises post acquistion, as redundant personnel are booted.




Atomizer's picture

Much bigger event to look at.

Dispatch: Presidential Elections in Belarus From: STRATFORvideo | December 15, 2010  |

Regardless of whether incumbent and likely winner Aleksandr Lukashenko emerges victorious from Belarus' upcoming presidential election, Analyst Eugene Chausovsky says Belarus will remain under Moscow's thumb.

CrashisOptimistic's picture

First of all your link doesn't work.

Second of all, why is this important if nothing is going to change? 

Atomizer's picture

Abracadabra... waves black wand & throws pixies dust into air.

You need to follow politics to make money. Your in the mist of a global labor war. Governments don't pay for new infrastructure, peasants do.

Problem Is's picture

What a crack head...

" GDP growth could be above 3 pct, and it would not surprise me if some start forecasting close to 4 pct soon."

Spalding_Smailes's picture

Its true.

By the middle of next year you will be kicking yourself for not buying in December. LVSands will be $70-80, US Steel $80 plus..

penisouraus erecti's picture

Wish in one hand, shit in the other. See which one gets filled first. 

And we see this by the ENORMOUS jump in hiring going on out there.


10044's picture


Julian Assange Calls ABC News Reporter 'Tabloid Schmuck' And Walks Off When Asked About Rape Charges
Salinger's picture

FYI businessinsider could also be considered 'Tabloid Schmuck'

One Ton Lady's picture

Curious use of terms for a Aussie. 

zaphod's picture

Now that's how you treat the press. Mock away Julian, they'll still follow you around and love you.