Yield Curve

Why "It’s Hard Being A Bear"

It is always hard to buck the crowd, to be a bear when the market is up this much, this fast. Stocks are rallying and being underweight gets harder to maintain every day. The bulls are out there yapping about how this was just another correction, another dip to buy and that we better get back in, yada, yada, yada. What makes being bearish so hard is the noise of the perpetually bullish street, the lure of easy money in a market you know is overvalued but keeps going higher. Like JM Keynes "I change my mind when the facts change." Despite the rally, the facts – at least for now – still favor the bears.

30Y Treasury Yield Tumbles, Signals Trouble Ahead For Banks

Safe haven buying is ignoring precious metals and piling into bonds today with the long-end notably outperforming (-6bps) today. This has compressed the yield curve even more, putting more and more pressure on the "rate-hike environment" hopers who bought banks like they were told...

Bank Of Japan Unleashes Yield Curve Chaos: JGBs Inverted At Short- And Long-End

You know you have 'tinkered' too much in the machincations of what dealers now call a "dead market" when the world's largest sovereign bond market is inverted at the short-end and the long-end. Simply put, bond investors reluctance to sell their holdings - amid negative-er and negative-er yields - means The BoJ runs the risk of being unable to meet its buying operations this week.

Janet Yellen: Monetary Arsonist - Armed, Dangerous And Lost

Simple Janet should have the decency to resign. The Fed’s craven decision last week to punt on interest rate normalization is not merely a reminder that she is clueless and gutless; we already knew that much. Given the overwhelming facts on the ground - 4.9% unemployment, 2.3% core CPI and a 23.7X PE multiple on the S&P 500 - her decision to “pause” after 87 months of ZIRP actually proves she is a blindfolded monetary arsonist - armed, dangerous and lost.

Global Stocks Levitate Despite Ongoing Oil Weakness; China Stocks Jump After Easing Margin Debt

At the same time as the PBOC was cautioning about the dangers of excess debt (just as it injected a record amount of loans into the financial system), China's central bank warned about dangers from a stock market bubble, and perhaps just to assure the bubble gets even bigger, at the same time China eased on margin debt limits, in the process sending Chinese stocks soaring higher by 2.2%, and pushing the Shanghai Composite over 3000 for the first time in months as China now appears set to attempt another housing bubble "soft landing" while at the same time restarting its housing bubble.

Japan Curve Inverts After 10-Year Yield Drops To New Record Negative Low

It was just last week when we observed and reported a highly amusing example of what excessive central bank meddling hath wrought in DM government bond markets. Just nine days later, the very same dynamic that sent JGB 10s on a wild two-day ride played out again - only in reverse.

Trading The FOMC

With the market already pricing in dramatically fewer rate-hikes that the "cheerleading" Fed, Deutsche Bank expects the USD to respond favorably to the FOMC’s signals on Wednesday, contrary to the pattern seen after the last four FOMC meetings with press conferences. While 'bankers' are clamoring for rate-hikes (warning of "consequences" should The Fed fail to deliver), Citi sees 5 of the 6 main drivers of Fed decision-making pointing to a hike... and an echo of Oct 2015's dip-and-rip.

JPM Looks At Draghi's "Package," Calls It "Solid," But Underwhelming

"On the negative side, the forward inflation targets were downgraded substantially, ECB didn’t address the issue of capacity constraints, and the shift in focus away from facilitating further currency depreciation will, in our view, end up being a negative for region’s equity market. Overall, we believe the latest package is far from a game changer."

Why This Sucker Is Going Down - The Case Of Japan's Busted Bond Market

The world financial system is booby-trapped with unprecedented anomalies, deformations and contradictions. It’s not remotely stable or safe at any speed, and most certainly not at the rate at which today’s robo-machines and fast money traders pivot, whirl, reverse and retrace. Indeed, every day there are new ructions in the casino that warn investors to get out of harm’s way with all deliberate speed. And last night’s eruption in the Japanese bond market was a doozy.

The "Terrifying Prospect" Of A Triumph Of Politics Over Economics

All of life’s odds aren’t 3:2, but that’s how you’re supposed to bet, or so they say. They are not saying that so much anymore, or saying that history rhymes, or that nothing’s new under the sun. More and more 'they's seem to be figuring out that past economic and market experiences can’t be extrapolated forward - a terrifying prospect for the social and political order.

Prices Matter - Why Central Bank 'Fiddling' Is A Bad Idea

Call us old fashioned, but we still think prices matter. When prices are right, money flows to the most productive endeavors and economies work efficiently. When prices are wrong, crazy things eventually happen, with potentially dire consequences. That’s why we should be very worried about Japan, where things are getting crazy.

The Printing Press: A Great Way To Fool People

"The reason that we’re still here, when we really should have fallen apart based on how much debt there was out there, and various other measures of instability, is that a printing press has turned out to be a great tool for fooling people...but in the longer term gold is a beneficiary of the instability that necessarily flows from borrowing too much money"