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Trading The Curve: What The Shape Of The Treasury Yield Curve Can Tell Us At Any Given Moment
While hardcore readers will be quite familiar with the observations presented in the attached paper "Yield Curve and the Economic Cycles", by reader Kiril Yoradnov, novice bond enthusiasts should note the presented correlation between the shape of the yield curve and the phase of a particular economic cycle it resides in. Of note is that while the 2s10s was recently at all time record highs in the 290 bps range, the curve has since collapsed and was trading at 239 bps earlier even as the 2 Year is once again near all time record tights, an observation which in itself makes absolutely no sense considering the stock market action, and is merely another validation of a market ill with Schrodinger's syndrome, where we now have inflation and deflation rampant concurrently, and, frankly, idiotically. Perhaps it is time to move on from colored swan reference when discussing the market, to those of felines caught in parallel states of existence until the vigilantes wake up and finally collapse Bernanke's middle-class theft function. Regardless, the question is whether the collapse of the 10 Year will continue, further flattening the curve, and setting of alarms everywhere (while illogical and manipulated stocks will no doubt be hitting 36,000 at about the same time just to prove to the world that Fed Chairmen see record stock levels and record economic output as precisely synonymous).
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meanwhile, a populist sighting worth mentioning. two bumper stickers...on a bentley.
"clean the house...AND the senate 2010"
"all the seats are the peoples seats"
And as our movement "keeps rolling" along many of you are working on a name. Latest entry submitted by the Village Idiot, for your review -
"PROJECT HEY MAN"
No doubt, this will not be in the top five. keep It Rolling - and don't forget to pull the max from your ATM on August 12. Party on.
why the 12? whats happening on the 12th?
DoChen suggested a symbolic move to crash the banks - a collective ATM withdrawl on August 12. Pull the most you can and leave it out as long as you can.
Listening.
Blah, blah, blah...how can the curve tell us anything when there are only a couple of players/suckers in the T and MBS markets anyway?
Maybe a good historical perspective, but history is out the door when working within this era of unaccountable delusion!
Agreed - it's so hard to use historical references when all of the correlations have gone to 1, especially since the Great Leveraging (1960 - 2008) cannot be used to plot out the Great De-Leveraging.
You want delusion: Illinois owes 2,000 vendors $100,000 or more in unpaid bills.
http://www.illinoisisbroke.com/vendors.aspx
Brief, articulate, plain-spoken. This was a great help that I very much appreciate.
PANCAKE BITCHES !! until you just can't anymore.. capitulation
Miles submits "PANCAKE BITCHES !!" as a defining name for our movement. Thank you, Miles. Keep It Rolling
LMAO!!!
I always find turning the trails to max length and clicking animate to be interesting on this. http://stockcharts.com/charts/YieldCurve.html
It looks so perfect now. I have no real idea what it portends but it does look like the it inverts in 2006, they lost control of the short end back in the middle of 2007,things get very volatile through the lows, then the low end gets pinned to the lowest left hand corner and does not move. The whole thing appears to be trying to to go vertical near the end.
Just as a question. If your short term interest rates(where everything seems to get rolled) blow higher than your long term rates does that mean there is concern that obligations will not be met in the short term? Was the bond market showing that there was more than a passing chance the US could blow up in the 13-26 week range? Then that fear subsided when the whole QE1.0 kicked in and the alphabet soup was served?
How does throwing more debt into the picture lower the risk of default?
that's a cool graph.
You might like the Living Yield Curve:
http://www.smartmoney.com/investing/bonds/the-living-yield-curve-7923/
I came across this a year, year and a half ago, but apparently they keep it updated because it goes straight through this month.
Another great sign for our society? If you look at the end, you'll see that in the time the page has been up (at least a year, possiby two), 18 people have "liked" it on Fuckbook.
That is cool, thanks.
I just can't believe half of what I read out there
http://www.bearmarketinvestments.com/and-the-bond-fraud-continues
There must be a plunge bot in most stocks and currencies right now, cause all the charts look the same...
"another validation of a market ill with Schrodinger's syndrome, where we now have inflation and deflation rampant concurrently, and, frankly, idiotically."
You obviously don't read the comments much Durden. I've posted it a few times & I'll do it again; inflation & deflation are the same thing, at most two facets of the same monetary disorder. It's not idiotic at all to have both concurrently.
You can't have one.... without the o-th-er.
Does it matter, when the curve flatens, if the short end goes up or the long end down? I think it does.