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A Treasury Curve Refresher
Considering how suddenly it has once again become fashionable to talk the Treasury curve (as expected, the halflife of the contagion conversations was 2 weeks), after conveniently ignoring it for about 6 months when it continued to show deteriorating profitability for banks, we think it is useful to provide a reminder of what the curve looks like currently.
Below is the entire UST curve: as can be seen the 30 Year has only recently broken into the 4% range, and despite the rather violent snapback of the belly, much as we have been expecting, it is relatively modest in the grand scheme of things.
More importantly, below is a chart of the various curve carry trades: the 2s10s, the 10s30s, the 2s30s, and the 2s10s30s butterfly. And once again, while it is convenient to the punditry to point out that the 2s10s has steepened (to August levels), a time when financials were crashing before the announcement of QE2, and just after a pre-sell out Goldman downgraded the economy following the horrendous August NFP report, what the "economists" did use as narrative, was the steepening in the 10s30s. Sure enough, the 10s30s steepened to a record in early November. Yet what is curious, and gets no mention, is that even as the 2s10s has steepened modestly, on a relative basis the 10s30s has collapsed. But, of course you won't hear that elsewhere. Which is why you can see it in the chart below, which unlike Wall Street sellside does not selectively pick and choose goal seeked data.
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2s10s and 2s30s... Flatteners FTW
Imagine what the yields would be if The Bernank wasn't monetizing all federal (and soon to be state) deficit spending.
They might actually be of 'free market' type yields, actually attracting real investors, to actually buy U.S. Treasuries for their attractive yield!
What a concept! Have the free market determine where interest rates on U.S. debt should be!
Will the last true capitalist please turn out the lights?
(You know, that whole 'cap & trade' scam is going to make electricity ridiculously expensive)
*Rates will once again be determined by those who take true risk and reward into account, and by then, The Bernank will be gone, one way or the other.
The program is much larger than the cap and tax scam. Think internet regulations and new taxable commerce. The background cunts are simply children shadowing a TV cartoon character.
On mobile, if I get a chance this evening, will post the special study group link.
In the meantime. Google web 2.0
Back home now. This will not require any cliff notes, all is self explanatory.
STI - International
http://www.sti2.org/
With over a billion users, today's Internet is arguably the most successful human artifact ever created. The Future Internet, an initiative driven by the European Union, has become a prime research focus of STI International and the Service Web 3.0 project. In order to explain, promote, and attract new contributors, we created a video to be viewed by stakeholders, who may be non-experts, in a new generation Internet. The video outlines the basic themes of the European Union's Future Internet initiative. These include: an Internet of Services, where services are ubiquitous; an Internet of Things where in principle every physical object becomes an online addressable resource; a Mobile Internet where 24/7 seamless connectivity over multiple devices is the norm; and the need for semantics in order to meet the challenges presented by the dramatic increase in the scale of content and users.
http://www.youtube.com/watch?v=off08As3siM
Revenue Management Stream
http://www.tmforum.org/RevenueManagementSpotlight/9086/home.html
The Semantic Web: Not a Moment Too Soonhttp://www.clickz.com/clickz/column/1930369/semantic-web-moment-soon
So while LOIC are basically flooding websites, not much has been discussed on the real problem..
December 9, 2010 12:18 PM PST Microsoft to plug critical IE, final Stuxnet Windows holeshttp://news.cnet.com/8301-27080_3-20025204-245.html
Again, more media distraction to pass the agenda.
Stuxnet: Cybersecurity Trojan horsehttp://www.isa.org/InTechTemplate.cfm?template=/ContentManagement/ContentDisplay.cfm&ContentID=84318
anyone catch this Stansberry piece ? I recommend all have a look...
http://www.stansberryresearch.com/pro/1011PSIENDVD/PPSILC08/PR
Re Stansberry report: I believe it's all coming to pass with USD d/c as reserve currency, etc,
But, did you sign up for it? What's the tips and assets he recommends (selling)
Watch the video, but read this before you hit 'subscribe'.
http://www.timothysykes.com/2010/08/porter-stansberry-of-stansberry-researchs-1.5-million-sec-fine-for-securities-fraud/
china is quietly dumping treasuries - plain and simple.................
The Chinese subsidize US consumer borrowing by bidding up bond prices. Selling Treasuries is driving the demand for the dollar; rising yields will push up borrowing costs to US consumers...game over, Jack.
Thanks. Nice graphics.
Is this 2s10s30s butterfly a trade set up between the i% differentials of the various Bonds?...is it related to some external factor...are there two sides to the trade, like a buyer and seller, or is it some form of arbitrage?
I looked, got sidetracked.
A "butterfly" is a 3-legged trade where you're playing the middle against the wings.
So in a 2-10-30 you'd be long 2s & 30s while short 10s, or vice versa. You could also do a 2-5-10 fly, or a 5-10-30.
Instead of a directional play like long 2s against short 10s, you're saying you think the curve is kinked and you want the body to rise against the wings, the wings to come back down relative to the body, etc.
As far as the other side of the trade, there might be people with the opposite position, but you don't have to buy a butterfly from someone selling the same butterfly. You just buy your 10s and sell your 2s & 30s (or whatever). There's obviously someone on the opposite of each of those, but you don't need someone with the opposite total position.
QE3 in Jan, enjoy
Tyler, the point is you have been WRONG on the direction of the 30 year. It is collapsing, and has collapsed 1000 bp since you sprouted your nonsensical bond bull scenarios 3 months ago. Give it up and get a life and short the F!$%k out of it.
Treasuries going south for the wrong reasons. Credit quality rather then recovery. Quite ominous. Retail and Bernanke both are long. Nuff said.
Nice work Tyler.
Thanks.
.
I'm betting long on WTF, RUSrz?