http://www.zerohedge.com/fullrss2.xml/component/option%2Ccom_docman/Itemid%2C200023/gid%2C397/BoomBustBlog/BoomBustBlog/BoomBustBlog/BoomBustBlog/Is-this-the-Breaking-of-the-Bear.html en Jeff Gundlach Warns "The Fed Is About To Make A Big Mistake" (& That's Why Bond Yields Are Crashing) http://www.zerohedge.com/news/2015-01-28/jeff-gundlach-warns-fed-about-make-big-mistake-thats-why-bond-yields-are-crashing <p>Since The FOMC's "hawkish" statement, bond yields have utterly cratered as near-record speculative short positioning in bonds unwind the long-end (and worries about international problems - "<span class="a" style="left: 530px; top: 2700px; word-spacing: 1px;">and readings on financial </span><span style="text-decoration: underline;"><span class="a" style="left: 3652px; top: 2700px; color: #2e97d3;">and </span><span class="a" style="left: 530px; top: 2785px; color: #2e97d3;">international </span></span><span class="a" style="left: 952px; top: 2785px; word-spacing: 2px;">developments")</span>. However, fundamentally speaking, <a href="http://www.bloomberg.com/news/articles/2015-01-28/gundlach-sees-fed-bungling-exit-then-backtracking-with-new-cut">DoubleLine's Jeff Gundlach explains</a>, the Federal Reserve is on the brink of making a big mistake simply put, <em><strong>"if Fed Chair Janet Yellen goes ahead with this plan (to raise rates for 'philosophical reasons'), she runs the risk of having to quickly reverse course and cut interest rates."</strong></em></p> <p>&nbsp;</p> <p>Bond yields crash...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_gund.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_gund.jpg" width="600" height="333" /></a></p> <p>&nbsp;</p> <p><a href="http://www.bloomberg.com/news/articles/2015-01-28/gundlach-sees-fed-bungling-exit-then-backtracking-with-new-cut"><em>As Bloomberg reports,</em></a></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Jeffrey Gundlach says the Federal Reserve is on the brink of making a big mistake.</strong></p> <p>&nbsp;</p> <p>U.S. central bankers have been talking about raising benchmark borrowing costs this year even though the outlook for global growth is worsening as oil prices tumble.<strong> If Fed Chair Janet Yellen goes ahead with this plan, she runs the risk of having to quickly reverse course and cut interest rates, according to Gundlach.</strong></p> <p>&nbsp;</p> <p>“There’s no fundamental reason to raise interest rates,” Gundlach, chief executive officer at DoubleLine Capital LP, said at a conference yesterday in Hollywood, Florida. <span style="text-decoration: underline;"><strong>“My idea is the Fed raises rates for philosophical reasons. That may be short-lived.”</strong></span></p> <p>&nbsp;</p> <p>..</p> <p>&nbsp;</p> <p>Despite this backdrop, most analysts expect central bankers to go through with some sort of tightening this year. Money-market derivatives traders are pricing in a rate increase in the fourth quarter, too.</p> <p>&nbsp;</p> <p><strong>“This is the triumph of hope over experience,” </strong>Gundlach said.</p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>Still plenty more shorts to squeeze...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_gund1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_gund1.jpg" width="600" height="329" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="386" height="329" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/Gundlach_0.jpg?1422476655" /> </div> </div> </div> http://www.zerohedge.com/news/2015-01-28/jeff-gundlach-warns-fed-about-make-big-mistake-thats-why-bond-yields-are-crashing#comments Bond Borrowing Costs Federal Reserve Florida Gundlach Janet Yellen Jeff Gundlach Wed, 28 Jan 2015 20:06:09 +0000 Tyler Durden 501115 at http://www.zerohedge.com The Fed's Message, Simplified: Shortest FOMC Statement Since 2012 http://www.zerohedge.com/news/2015-01-28/feds-message-simplified-shortest-fomc-statement-2012 <p>While the Fed is clearly hinting that lower crude inflation doesn't bother it because "<em>recent declines in energy prices have boosted household purchasing power</em>" and is generally more hawkish on the economy and the labor force, the clearest message from the Fed is simple: or so it would like to convey. At 569 this was the shortest FOMC statement since November 2012! Which can only mean one thing: an attempt at renormalization, if only for now.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/01-overflow/FOMC%20Words.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/01-overflow/FOMC%20Words_0.jpg" width="600" height="370" /></a></p> <p>So what happens next if the relentless USD surge continues with the markets expecting a Fed rate hike? We'll find out soon enough.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_dxy.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_dxy_0.jpg" width="600" height="299" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="998" height="616" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/FOMC%20Words.jpg?1422474649" /> </div> </div> </div> http://www.zerohedge.com/news/2015-01-28/feds-message-simplified-shortest-fomc-statement-2012#comments Crude Purchasing Power Wed, 28 Jan 2015 19:50:55 +0000 Tyler Durden 501114 at http://www.zerohedge.com Stock Market Liquidity Is The Lowest Ever For An FOMC Day http://www.zerohedge.com/news/2015-01-28/stock-market-liquidity-lowest-ever-fomc-day <p><strong>One way or another this is going to get wild...</strong> As Nanex exposes, liquidity in the S&amp;P 500 e-mini futures contract (the most liquid equity trading vehicle) is the lowest it has ever been on an FOMC Day...</p> <p>&nbsp;</p> <blockquote class="twitter-tweet" lang="en"><p>Comparing eMini Liquidity to past FOMC days <a href="https://twitter.com/search?q=%24ES_F&amp;src=ctag">$ES_F</a> - today is the lowest <a href="http://t.co/8dnVuVlQ9r">pic.twitter.com/8dnVuVlQ9r</a></p> <p>— Eric Scott Hunsader (@nanexllc) <a href="https://twitter.com/nanexllc/status/560518609613905922">January 28, 2015</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="620" height="494" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150128_oops2.jpg?1422473500" /> </div> </div> </div> http://www.zerohedge.com/news/2015-01-28/stock-market-liquidity-lowest-ever-fomc-day#comments Twitter Twitter Wed, 28 Jan 2015 19:32:02 +0000 Tyler Durden 501113 at http://www.zerohedge.com Markets Tumble As FOMC 'Upgrades' Economy & Jobs In Hawkish Statement http://www.zerohedge.com/news/2015-01-28/markets-disappointed-fomc-upgrades-economy-jobs-hawkish-statement <p>The 4 key phrases from today's FOMC Statement are:</p> <ul> <li><strong>"Strong Jobs Gains" instead of "Solid Job Gains", <br /></strong></li> <li><strong>"Considerable time" sentence dropped entirely</strong><strong> <br /></strong></li> <li><strong>"Solid Pace" instead of "Moderate Pace" For Economy</strong></li> <li><strong>Add "Inflation is anticipated to decline further in the near term" as new language</strong></li> </ul> <p>And voila, a hawkish policy statement... <strong>sending stocks, crude, and bond yields sliding on the news</strong>.</p> <p>&nbsp;</p> <blockquote class="twitter-tweet"><p>"Strong Jobs Gains" instead of "Solid Job Gains"</p> <p>— zerohedge (@zerohedge) <a href="https://twitter.com/zerohedge/status/560514232396283906">January 28, 2015</a></p></blockquote> <blockquote class="twitter-tweet"><p>"Considerable time" sentence dropped entirely: algos no longer have the green light to buy</p> <p>— zerohedge (@zerohedge) <a href="https://twitter.com/zerohedge/status/560516035888308225">January 28, 2015</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><script src="//platform.twitter.com/widgets.js"></script><blockquote class="twitter-tweet" lang="en"><p>"Solid Pace" instead of "Moderate Pace "</p> <p>— zerohedge (@zerohedge) <a href="https://twitter.com/zerohedge/status/560514075311210496">January 28, 2015</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>*&nbsp; *&nbsp; *</p> <p>Initial pop and now Stocks, crude and bond yields tumbling...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_oops1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_oops1_0.jpg" width="600" height="933" /></a></p> <p>&nbsp;</p> <p>Crude crashed to new cycle lows...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_oops.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_oops_0.jpg" width="600" height="382" /></a></p> <p>&nbsp;</p> <p>... just as the Fed predicted moments ago:</p> <blockquote class="twitter-tweet" lang="en"><p>"Inflation is anticipated to decline further in the near term" - new language</p> <p>— zerohedge (@zerohedge) <a href="https://twitter.com/zerohedge/status/560515422190321665">January 28, 2015</a></p></blockquote> <script src="//platform.twitter.com/widgets.js"></script><p>The entire curve is dropping (even short-term rates)...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_oops4.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_oops4.jpg" width="600" height="321" /></a></p> <p>&nbsp;</p> <p>*&nbsp; *&nbsp; *</p> <p>Full Statement: </p> <p><iframe src="https://www.scribd.com/embeds/254008968/content?start_page=1&amp;view_mode=scroll&amp;access_key=key-7BxNW0lDucfJ7I684vdy&amp;show_recommendations=false" width="100%" height="600" frameborder="0" scrolling="no"></iframe></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="957" height="504" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150128_oops3.jpg?1422473918" /> </div> </div> </div> http://www.zerohedge.com/news/2015-01-28/markets-disappointed-fomc-upgrades-economy-jobs-hawkish-statement#comments Bond Crude Wed, 28 Jan 2015 19:15:03 +0000 Tyler Durden 501112 at http://www.zerohedge.com Unanimous Fed Remains "Patient" On Target To Normalize Rates, Expects Lower Inflation - Full Statement Redline http://www.zerohedge.com/news/2015-01-28/unanimous-fed-remains-patient-target-normalize-rates-expects-lower-inflation <p>With all eyes firmly focused on the words &quot;patient&quot; on rate hikes, &quot;considerable&quot; period of lower rates, and &quot;transitory&quot; oil-driven deflation, The FOMC did not disappoint</p> <ul> <li><strong>*FED REPEATS IT CAN BE PATIENT IN STARTING TO RAISE RATES</strong></li> <li><strong>*FED SAYS ECONOMY HAS BEEN&nbsp; `EXPANDING AT A SOLID PACE&#39;</strong></li> <li><strong>*FED CITES `STRONG JOB GAINS&#39; AND LOWER UNEMPLOYMENT RATE</strong></li> <li><strong>*FED SAYS INFLATION EXPECTED TO DECLINE FURTHER IN NEAR TERM</strong></li> </ul> <p>So shrugging off the global tumult, The Fed appears set to raise rates no matter what to remove themselves from the corner they are stuck in, wary of what they can do when the next &#39;event&#39; hits home.</p> <p><strong>Pre-FOMC:</strong> S&amp;P Futs 2024.50, Gold $1286, 10Y 1.778%, EURUSD 1.1339, Dec15 ED 99.285. <em>Full redline below.</em></p> <p>*&nbsp; *&nbsp; *</p> <p>Liquidity disappeared into the statement</p> <blockquote class="twitter-tweet" data-partner="tweetdeck"><p>As you can see - eMini liquidity is at its lowest levels for this time since at least 2010 <a href="https://twitter.com/search?q=%24ES_F&amp;src=ctag">$ES_F</a> <a href="http://t.co/x5KiLPaiwn">pic.twitter.com/x5KiLPaiwn</a></p> <p>&mdash; Eric Scott Hunsader (@nanexllc) <a href="https://twitter.com/nanexllc/status/560511981036507137">January 28, 2015</a></p></blockquote> <script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script><p>&nbsp;</p> <p><strong>Since The Fed ended QE3</strong>, Bonds are up almost 14%, stocks flat, and precious metals up 9-11% (oil down 42%)</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_FOMC3.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_FOMC3.jpg" style="width: 600px; height: 314px;" /></a></p> <p>&nbsp;</p> <p><strong>And since The Dec 2014 FOMC</strong>, Silver is up 15% with bonds, gold, and USD up around 7%</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_FOMC4.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_FOMC4.jpg" style="width: 600px; height: 316px;" /></a></p> <p>&nbsp;</p> <p>*&nbsp; *&nbsp; *</p> <p>In light of today&#39;s statement, we thought the following would be interesting...</p> <p><strong>What The Fed said in the past about The Dollar strength...</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_FOMC1.jpg"><img height="388" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_FOMC1_0.jpg" width="600" /></a></p> <p><em>h/t @JohnAuthers</em></p> <p><strong>And Unemployment...</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_FOMC2.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_FOMC2_0.jpg" style="width: 600px; height: 372px;" /></a></p> <p><em>h/t</em> @enlundm</p> <p>*&nbsp; *&nbsp; *</p> <p>And the full statement redline:</p> <p>&nbsp;</p> <p><iframe class="scribd_iframe_embed" data-aspect-ratio="0.7729220222793488" data-auto-height="false" frameborder="0" height="600" id="doc_63053" scrolling="no" src="https://www.scribd.com/embeds/254008968/content?start_page=1&amp;view_mode=scroll&amp;access_key=key-7BxNW0lDucfJ7I684vdy&amp;show_recommendations=false" width="100%"></iframe></p> http://www.zerohedge.com/news/2015-01-28/unanimous-fed-remains-patient-target-normalize-rates-expects-lower-inflation#comments Precious Metals Twitter Twitter Unemployment Wed, 28 Jan 2015 19:03:32 +0000 Tyler Durden 501111 at http://www.zerohedge.com US Inflation Expectations Hit Post-Lehman Lows Ahead Of FOMC http://www.zerohedge.com/news/2015-01-28/us-inflation-expectations-hit-post-lehman-lows-ahead-fomc <p>In what appears perfect timing, <strong>US inflation expectations (as measure by the market) have plunged to post-Lehman plunge lows - falling further even after The ECB unleashed Q€ last week</strong>... we are sure The Fed will be 'patient' and dismiss this as a good dis-inflationary trend that is merely 'transitory' but isn't it ironic...</p> <p>&nbsp;</p> <p>US Inflation expectations hit post-Lehman lows...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_5Y5Y.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_5Y5Y_0.jpg" width="600" height="316" /></a></p> <p>&nbsp;</p> <p>and then the IMF comes out and says... </p> <ul> <li><strong>*ECB QE KEY TO COMBATING DEFLATION RISK, IMF OFFICIAL SAYS</strong></li> </ul> <p>Which appears to be an utter failure in that regard...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_5Y5Y1.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_5Y5Y1_0.jpg" width="600" height="316" /></a></p> <p>&nbsp;</p> <p><em>Charts: Bloomberg</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="960" height="505" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150128_5Y5Y.jpg?1422467867" /> </div> </div> </div> http://www.zerohedge.com/news/2015-01-28/us-inflation-expectations-hit-post-lehman-lows-ahead-fomc#comments Wed, 28 Jan 2015 18:44:58 +0000 Tyler Durden 501110 at http://www.zerohedge.com "Patient" Fed's Other Problem: A Third Of Traders Today Have Never Witnessed A Rate Hike http://www.zerohedge.com/news/2015-01-28/patient-feds-other-problem-third-traders-today-have-never-witnessed-rate-hike <p><strong>2014 was "relatively easier,"</strong> as the pre-determined pace of tapering had The Fed on auto-pilot last year. However, as WSJ's Jon Hilsenrath warns, <a href="http://www.wsj.com/articles/hard-choices-on-easy-money-lie-ahead-for-fed-chief-1422394165?mod=WSJ_hp_LEFTTopStories"><strong>Janet Yellen ’s job is about to get harder</strong></a>. Hinting that The FOMC is likely to remain "patient" in deciding when to start raising short-term interest rates later this year (and markets have started to price in lower for longer-er following recent macro weakness domestically and abroad). Juxtaposed against a mixed picture of the economy is concerns of being boxed in at ZIRP should another economic downturn arrive. However, as III Associates notes, it is the communications challenge for The Fed that is most problematic, <strong><em>"it has been nine years since the last rate hike, and I’d estimate about a third of those working on trading floors have never witnessed one."</em></strong></p> <p>&nbsp;</p> <p><a href="http://www.wsj.com/articles/hard-choices-on-easy-money-lie-ahead-for-fed-chief-1422394165?mod=WSJ_hp_LEFTTopStories"><em>Via The Wall Street Journal</em></a>,</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Janet Yellen ’s job is about to get harder after a relatively easy first year as Federal Reserve chairwoman.</strong></p> <p>&nbsp;</p> <p>She and her Fed colleagues on Wednesday are likely to repeat after a two-day policy meeting that they “can be patient” in deciding when to start raising short-term interest rates later this year—meaning no rate increases at their next gatherings in March or April.</p> <p>&nbsp;</p> <p><strong>But in the weeks ahead, she’ll face the challenge of forging consensus on whether to formally open the door to rates increases in June.</strong></p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p>Many Fed officials have said they expect to start raising their benchmark short-term interest rate from near zero around the middle of the year. Ms. Yellen said last month that the “patient” language signals no rate increase for at least two meetings. That means if officials want to signal the possibility of a rate increase in June, they’ll need to alter or drop the phrase at the meeting March 17-18.</p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p>“These are going to be <strong>consequential choices that are going to involve subtle judgment about the economy and market, not just here but abroad</strong>, and that is a challenge,” said Lewis Alexander, chief U.S. economist at Nomura Securities.</p> <p>&nbsp;</p> <p>In fed funds futures markets—where traders buy and sell contracts based on expected shifts in the Fed’s benchmark interest rate—<strong>participants have been marking down the probability of a Fed move by June.</strong></p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p><strong>“The kinds of things we’re observing now—it is not the constellation of data that would be consistent with a zero policy rate. I think it is important to get started and to start normalizing policy,” Mr. Bullard said in an interview last week.</strong></p> <p>&nbsp;</p> <p>Other officials have doubts. <strong>“Based on the data right now I’m not particularly confident [inflation will return to 2%]. That is exactly why I’m willing to be patient,” Boston Fed Eric Rosengren said in an interview.</strong> He said he was particularly wary of falling yields on 10-year Treasury notes, a signal that investors don’t see upward pressure on inflation.</p> </blockquote> <p>However, no matter what, change is not good for the market (as we noted previously). As Hilsenrath concludes, Yellen's first year in office demanded a great deal of planning, but not many nail-biting decisions... now she has a problem...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><span style="text-decoration: underline;"><strong>“The pace of tapering, $10 billion per meeting, precluded any other action in 2014, so last year was relatively easier,” said Karim Basta, chief economist at III Associates, an investment adviser. “The communications challenge of the first rate hike will be substantial in that it has been nine years since the last rate hike, and I’d estimate about a third of those working on trading floors have never witnessed one.”</strong></span></p> </blockquote> <p>*&nbsp; *&nbsp; * </p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="606" height="582" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150128_yell.jpg?1422455317" /> </div> </div> </div> http://www.zerohedge.com/news/2015-01-28/patient-feds-other-problem-third-traders-today-have-never-witnessed-rate-hike#comments Federal Reserve Janet Yellen Nomura Wall Street Journal Wed, 28 Jan 2015 18:22:06 +0000 Tyler Durden 501109 at http://www.zerohedge.com Bond Market Not Seeing Any Upcoming Rate Hikes After A Blistering 2 Year Auction http://www.zerohedge.com/news/2015-01-28/bond-market-not-seeing-any-upcoming-rate-hikes-after-blistering-2-year-auction <p>Last month, with the entire world <em><strong>absolutely certain </strong></em>that the Fed would hike rates, it seemed it was easier to pull teeth than to find buyers for the December 2 Year acution. Not so much this time: moments ago the US Treasury sold $26 billion in 2 Year paper in an auction delayed from yesterday's snow day, in a whopper of an auction which saw 3.739 dollars in demand for every dollar, a Bid to Cover that was the highest since December 2013 and far above the 3.38x TTM average. </p> <p>And it wasn't the rising yield that drove interest: quite the contrary - the High Yield of 0.54% not only plunged from last month's 0.703%, but also priced through the 0.544% When Issued. </p> <p>Finally, while Directs took down only 8.75% as a result most likely of Pimco moving away from the short-end, and the lowest since June 2013, <strong>it was the Indirects that soared to 48.7%, the highest since February of 2010 when it was 54%.&nbsp; </strong></p> <p>Overall, if anyone is seeing a rate hike announcement on the imminent horizon, it sure isn't the exuberant buyers of today's 2 Year auction.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/01-overflow/2%20Year%20Jan%202015.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/01-overflow/2%20Year%20Jan%202015_0.jpg" width="600" height="357" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1631" height="971" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2%20Year%20Jan%202015.jpg?1422468778" /> </div> </div> </div> http://www.zerohedge.com/news/2015-01-28/bond-market-not-seeing-any-upcoming-rate-hikes-after-blistering-2-year-auction#comments Bond High Yield PIMCO Wed, 28 Jan 2015 18:13:00 +0000 Tyler Durden 501108 at http://www.zerohedge.com Zimbabwe's Gold Mines On Verge Of Collapse Due To Low Bullion Prices http://www.zerohedge.com/news/2015-01-28/zimbabwes-gold-mines-verge-collapse-due-low-bullion-prices <p>To say that Zimbabwe has not had much luck in its recent, post <em>Robert Mugabe-goes-berserk</em>, history with fiat money is putting it lightly.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/01/100%20trillion_0.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/01/100%20trillion_0_0.jpg" width="486" height="241" /></a></p> <p>But did you know that with gold trading at prevailing depressed prices, driven over the past several years not by physical demand but by paper supply, Zimbabwe is about to have another "money" moment, only this time not with fiat but with real money. </p> <p>The reason: the same one why every so often we <a href="http://www.zerohedge.com/news/2014-12-30/peak-gold-production-hits-2015">show the gold cost curve</a>: because some miners simply can not continue operating if the "market" price of gold, with or without central bank and BIS intervention, is below their blended cost.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/01-overflow/gold%20cost%20curve.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/01-overflow/gold%20cost%20curve_0.jpg" width="502" height="338" /></a></p> <p>And while not shown explicitly on the chart above, unfortunately for the south African country, the cost curve of the entire Zimbabwe gold mining industry is on the <em>wrong </em>side of the gold price line. </p> <p>According to <a href="http://af.reuters.com/article/investingNews/idAFKBN0KT1EM20150120?sp=true">Reuters, </a>Zimbabwe's gold mining firms are suffering huge losses due to low gold prices "<strong>and could collapse unless the government reduces royalties for producers, the Chamber of Mines said</strong>." </p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/01-overflow/zimbabwe%20gold.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/01-overflow/zimbabwe%20gold_0.jpg" width="500" height="300" /></a></p> <p>The problem for Zimbabwe is that after relying too much on paper printing, it is now all too reliant on gold mining: gold is the single largest export earner in the southern African country, whose economy is flatlining as a result of lack of investment, electricity shortages and high cost of capital. Losing the mining sector would likely result in another major economic and financial crisis, although the local population is quite used to these by now. </p> <p>So while gold trades based entirely on where the Bank of International Settlements decides any given morning where it should close that day, physical gold production is about to lose a major source, something which in a normal world would result in a huge surge in the price and, as a reminder, is the entire premise behind Saudi Arabia's strategy to crush the US shale industry:</p> <p>More <a href="http://af.reuters.com/article/investingNews/idAFKBN0KT1EM20150120?sp=true">from Reuters</a>: </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>In a report issued in December the mining chamber said that mines were making losses of up to $100 an ounce due to weak gold prices and high electricity charges. </p> <p>&nbsp;</p> <p>Mines are charged higher electricity tariffs to ensure continuous supplies but this is not always the case in a country that produces 1,200 MW against a peak demand of 2,200 MW. </p> <p>&nbsp;</p> <p>In the report by the mining chamber seen by Reuters on Tuesday, the group said lower power tariffs and uninterrupted supplies would save gold mines up to $55 an ounce. </p> <p>&nbsp;</p> <p>"The above measures would have ensured the gold mining companies operate on a cash break-even basis and avert gold industry from collapse," the chamber said. </p> <p>&nbsp;</p> <p><strong>Chinamasa said in November the mining sector, which brings in more than half of Zimbabwe's export earnings, shrank for the first time in five years in 2014 due to low metal prices. </strong></p> <p>&nbsp;</p> <p><strong>The government has set an ambitious target of 28 tonnes of gold in the next five years, to match a record set in 1990. </strong>Chinamasa has forecast that gold output could rise to 16 tonnes this year from 14 tonnes in 2014. </p> <p>&nbsp;</p> <p>"If no immediate measures are taken, the likelihood of production reaching 1990 levels is very slim <strong>and in the extreme mines will go under care and maintenance to preserve assets," </strong>the mining chamber said.</p> </blockquote> <p>And even though none of this is surprising, we certainly can't wait to see the price of gold to <em><strong>plummet </strong></em>once the news that one of Africa's largest producers of the yellow metal turns the lights of its gold miners out. Because when it comes to that metal most hated by central planners and bankers everywhere, the laws of supply and demand have long since become inverted.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="460" height="276" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/zimbabwe%20gold.jpg?1422467570" /> </div> </div> </div> http://www.zerohedge.com/news/2015-01-28/zimbabwes-gold-mines-verge-collapse-due-low-bullion-prices#comments None Reuters Wed, 28 Jan 2015 17:52:54 +0000 Tyler Durden 501107 at http://www.zerohedge.com The History Of Global Crises Through The Eyes Of The US Dollar http://www.zerohedge.com/news/2015-01-28/history-global-crises-through-eyes-us-dollar <p>Which is better: a stronger dollar or a weaker dollar? You decide...</p> <p>&nbsp;</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_dxy.jpg"><img height="299" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01-overflow/20150128_dxy_0.jpg" width="600" /></a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p>&quot;King Dollar&quot; met Queen Caterpillar this week and awoke the beast of broken narratives that a strong dollar may not be the &#39;unambiguously good&#39; thing so many proclaim it to be. However, with the rest of the world competitively weakening their currencies (in order to &#39;help&#39; their economies), we hope the chart above will help readers decide which they prefer... a stronger (US multinational-crushing) dollar or a weak (domestic drag) dollar?</p> <p><em>h/t Liz</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1278" height="637" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20150128_dxy.jpg?1422461548" /> </div> </div> </div> http://www.zerohedge.com/news/2015-01-28/history-global-crises-through-eyes-us-dollar#comments Wed, 28 Jan 2015 17:33:12 +0000 Tyler Durden 501102 at http://www.zerohedge.com