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Treasury Steepener On Fire As Bond Market Flees From Far End Treasuries
Ever more investors are fleeing from not just the 30 year Treasury but the 10 year as well. Money is rapidly congregating in the whatever yields the sub 10 year space is providing. The fact that the upcoming QE 2.0 liquidity and housing stimulus does not contemplate UST purchases is definitely not helping.
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I love my TBT leaps!
More sauce for the fragile position of the system when the BBG matter climbs up the ladder and audit the fed hits the senate.
Keep selling America boys and girls!
Make sure NOBODY wants our worthless dollars :)
I love the claim..... Our exports will be more competitive!
Ummm, what do we export again?
Oh, our money.
I work in manufacturing as a supplier to medical device companies and they are exporting a ton right now. Unfortunately, with the new healthcare plan taxing them $40 Billion to pay for Obamacare, I'm not sure how well these exports will hold up. Let's shoot the leg of the best performing export industry we have. Who would want to create real weath???
30 yr. UST? 10 yr UST? Hell, this things gonna be over in 10 monthes!
Almost a Top Gun quote. I like it!
They will drain liquidity from SPY to support Treasuries. The question is when and how successful they will be. The Fed is committed to low bond yields.
Some of the old hands posting here mention 1987.
Did it look like this?
Right, now the stock market is fixed, cheap mortgages are Job Two for Lucy & Ethyl. There's an election coming up, remember?
No, they will just buy more Treasuries.
They have to stop at some point. They can't monetize the current budget and trillions of international holding rollovers every damn month.
musical interlude on this historic day
http://www.youtube.com/watch?v=4ahJIL_Aw5o
enjoyed it - thanks.
I'm a currency guy, so my understanding of bonds is limited. But won't this inadvertantly cause mortgage rates to go into the stratosphere?
yes
yup
The steepener crowd killed the flattener crowd (which includes Billy Gross) these past 5 trading days. Just one guy's $0.02 but I think that if the dollar continues lower that'll put a lot of pressure on the long end of the curve. Lately Billy's timing has been off, I mean he missed the Treasury rally of 08, so stands to reason he's early now too.
I still believe there is gnarly deflation ahead so this is not the dollar's swan song, but it will be a dress rehearsal. So we'll start soon to see talk of bond vigilantes doing what the Fed doesn't have the guts to do.
Every sign points toward us reflating the bubble and now that oil is at a 52 week high we can get this party (still the rehearsal) started. See y'all at S&P 2000 and oil over $200.
Steak, I completely agree with you on this. I'm not sure how much time Bill spends at PIMCO these days, but Mohomed El-Erian is as sharp as they get. Given that the Total Return Fund tows a line in excess of $150B, he's got plenty of time to pile into the long end of the curve before shit really hits the fan. But I do question how early he they have arrived for the party.
I'm not any kind of expert but I know it will cause mortgage rates to rise.
Watching this is like watching a dog trying to grab a wet ball thats a bit too big for his mouth.
Or like watching my retarded cousin in the pool trying to keep his beach ball from floating.
At this point, the big banks have conflicting goals. On one hand, they want to keep their adjustable-rate mortgages from defaulting; on the other, they don't want to grant fixed-rate loans at such a low rate.
From what I can tell, the Fed's gameplan is to buy up as many MBSs as possible to get them off the banks' books, and, then raise rates, to make fixed rate loans more profitable.
The rational thing to do right now would be to focus on survival...keep rates low. On the other hand, the most rational thing to do is usually not the thing they do. Conclusion: buy TBT?
modified reverse game theory at work.
This is such complete utter madness.
Will it ever end??? Is there anyone anywhere in this country in any kind of position of power and authority, who is reading these posts right now or similar writings elsewhere which represent our collective disgust and disbelief, who has the eyes to see and the ears to hear and the balls and integrity to stand up for truth and justice? Is anyone out there???????? Will this ever end??????????????
I share your frustration.
I am sad to say this, but we americans only react once things become a crisis.
we were in a crisis one year ago.
nothing about the factors that caused it (overwhelming debt) has changed.
@99068 Ivan... Not inadvertently, it directly feeds into mortgage rates. Conundrum, likely fixed by intervention per Jim 99044. 'til then white knuckles, though...
All these bearish posts have helped keep alot out of the markets, keep up the good work, we will need alot of suckers to soak it all up when the banks exit.
Whiskey,
I'm a 401k'er and I STILL know to trade what is in front of me, not the macro environment. If I'm representative of the Sheeple, the banks will find that they are crispy and good with ketchup.
Started scaling in in April. Scaled out by Labor Day. OK, I wasn't perfect. I lose my 2 + 20.
The government on the other hand, can't even make the damn traffic lights work.
k
GS should float a trillion or so of 10 year paper about now. It would yield less than Treasuries for sure. Think what they could do with a trillion.
I've been saying it or 7 or 8 years. The giant US banks are going to be selling paper yielding less than Uncle Sam. It coming, if it isn't already here. The effects may be subtle, but the ramifications will be stupendous. The passing of the torch of the dominant human organizational model. The corporation, the invention and child of government will no supersede government. It isn't like government has done such a bang up job after all. I'm agnostic actually about the whole thing.
The main complication pertains to the military. How does the military coexist with the corporate model. I suppose you think the sticking point will be citizens who still think they are part of a nation. Don't worry about them. They can be lead to believe anything.
GS should float a trillion or so of 10 year paper about now. It would yield less than Treasuries for sure. Think what they could do with a trillion.
I've been saying it or 7 or 8 years. The giant US banks are going to be selling paper yielding less than Uncle Sam. It coming, if it isn't already here. The effects may be subtle, but the ramifications will be stupendous. The passing of the torch of the dominant human organizational model. The corporation, the invention and child of government will no supersede government. It isn't like government has done such a bang up job after all. I'm agnostic actually about the whole thing.
The main complication pertains to the military. How does the military coexist with the corporate model. I suppose you think the sticking point will be citizens who still think they are part of a nation. Don't worry about them. They can be lead to believe anything.
TMV has worked well over the last week and will likely continue to do so until (and if) there is a stock market correction.
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