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US Bonds In "Panic" Mode
Based on Credit-Suisse's Panic-Euphoria model of risk appetite, US bond markets are on the verge of the short-term capitulative "Panic" mode. Each time we have reached this level of 'selling' in the last 6 years, Treasury yields have compressed significantly. At the same time, equity risk appetite remains bearish and US credit risk appetite has resumed its decline (but relative to Treasuries they are significantly over-sold). Not a pretty picture...
Bonds hit "Panic" levels of risk appetite...
but Equity risk appetite drifts bearishly...
and Credit risk appetite signficantly weaker...
but the sell-off in High-Grade and High-Yield bonds has been remarkable relative to historical precedent...
As Citi notes,
Investors fear the 1994 redux trade, are looking at ways to short markets that may be vulnerable to rising rates, including credit. But in total return terms the credit space has already suffered quite dramatically. The chart below shows that the high-grade and high-yield markets are down 3.2% and 1.7%, respectively, since the Treasury backup began in early May, which is far more severe than what normally occurs when rates rise (annualized long-term average of +0.1% and +11.4%, respectively).
It may not be fully priced in yet, but at this point the rates trade may really boil down to how quickly Treasury yields rise further.
Charts: Credit Suisse and Citi
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Who gives a flying "cunty fucking fuck"? Sorry I had to borrow that from another comment on Nouriel Roubini. Still laughing on that one.
And check out the Nikkei. After buying the futures all the way back to even, it's cratering (watch 24-hr futures) just like it did yesterday. Someone just did a whole lotta buyin' for Jack and Shit, and Jack left town.
http://www.youtube.com/watch?v=bj563ViG7Qg
Say what?
yeah. that's hilarious if you're fifteen or your IQ is fifteen.
My IQ is over 160, and I'm more than twice 15 now. I think it's hillarious.
Perhaps with that typically high internet IQ you can refer us all to the standardised test of reputable standing that can deliver that 1950s style evaluation.
Hint to save you some time: there isn't one.
Treasuries acted today like the Bernak announced he was going to 125 bil/mo. So did stawks. I don't see 1994 at all here. It's not even possible. Fuck you Citigroup.
It seems clear that fixed income is going to end up splintering with high yield etc. blowing up while treasuries stay pegged.
I think 10s glide lower. Fonz has good intuition. (Remember China took two days off this week)
People are getting pissed Yen. Retail played along with low rates for ever. Then they played ball with the taper. Today we (retail) got the taper stuffed up our ass. Now we will play ball with back to QE4eva. If Ben goes for taper again next week and rates back up again there will be no other way to explain this other than the fed has completely lost contol.
Yen:
You must of missed the new TV commercial about a company who is offering 6 months of zero commission fees to place your investment against HFT bets.
I don't need no stinking T.V. [IMG]http://imageshack.us/a/img819/5445/b3q.png[/IMG]
DUp.
Honestly Fonz. Meet your puppet masters http://www.federalreserve.gov/aboutthefed/default.htm
It's not worth my time to 'hyperlink it'<
The Federal reserve Board was founded to "quantify" and "ballance", a stable form of "fractional reserve currency".
Oh fonz, there is no loss of control. Only when the overt and incontrovertible signs of a nose dive in the economic numbers cause the fed to realize they are out of ideas....only then will they have lost control.........
Kito, knows his shite. +1
What is going to bother a lot of people, I think...is that yields are going to go higher. Not substantially higher, but higher none the less, and it won't be that bad. The end is not near. their will just be some bumps and bruises along the way.
I personally know a guy that has a few rental properties. It's not me, I expatriated. That has been "Milking the Cow" on rental income for 3 years. He has his property financed at (variable rates).
How do we deal with those scenarios Fonz?
You and kito are right Yen. I am angry but I am not going to get delusional. What I mean by the fed has lost control is there is almost no other way for me, or cnbc, or anyone to explain this stupidity. but that does not mean it's game over.
Regarding your friend. I think the lows are in on yields. If we get one more push lower I would be nailing anything I can down to a fixed rate. We won't roar higher. But much like the argument with gold..if something massive goes wrong and the knee jerk is to bonds and the 10yr goes sub 1% the banks won't be trying to lock in fixed rates. They will be scrambling for survival, and what comes after that will make Volker Blush. If you want to buy gold, lock in rates, buy ammo...etc. you should be doing it now. The calm (if you can call it that) may last a long time. But when it ends there will be no time to make your real play.
So you're playing the middle part of the curve fonz? Tyler expressed the pullback in the middle of the curve "5s-7s" in an article regarding GDP and Rates, the day before yesterday.
Tyler explained how earnings and supply were already pulled forward from 2015. He was being Japanese"Politely"
Tyler seems to be a little more overt lately. From what I see he thinks the move up in yield is a giant fake out. Yields will move back down and stocks will sell off.
It makes sense.
I think with bernanke's exit becoming totally apparent, they need to complete the bullshit cycle. That means we hear about growth all day long. Data surprises to the upside (after one more push down). rates move up. the fed tells everyone to calm down. rinse repeat. we end up somewhere in the 2.35-2.5% 10yr range. Bernanke exits stage left and get's his bald head on Mt.Rushmore....for a while...
I got the joke Fonz, I'm ROTFLMAO! Forward borrowing costs are a joke.
Tyler discussed pulling the curve in without {QE-Depends.}<
The cost of money should represent growth! In Chairsatans world , the cost of money represents an ghost {printing press}<.
Only we at zh will be bothered because we have been so sure rates couldn't budge one basis point without Armageddon..... but now we have the money men stating rates are going up for the right reasons...that its "growth and recovery" that allows for the rate increase....and "what a great job Ben has done leading America out of its dark days"........these maniacs keep challenging my sanity.......sigh.....
That is exactly right kito. They will push rates up just to make themselves look right. Growth and recovery.
If you are rich then you will believe it, besides if you are wrong you are still rich, so who gives a shit?
Rates are not going up till the Fed takes their balance sheet over 10T. You can thank me later.
the short end, probably right.
Europe and Japan completely blow up. Dollar spikes. Fed panics. They are just clearing the slate for Yellin now. That way she will own the dove fest japanization that comes next.
They had to taper MBS anyway. That market is too tight. This way they get the meme going that they have a plan and it works. Then they start issuing variable rate Treasuries and monetize the crap out of those. When that doesn't work, they start buying sovereign debt and munis.
"US Bonds In "Panic" Mode"
Ya, they look like they are going to panic right back down below 2%, and a lot further with some nice, delicious fear spread around oldsters (who, never forget, are the ones with the money -- "Mr Old Dood, your asset allocation should be defined by your age. If you are 65, then 65% bonds. If you are 75, the 75% bonds." Those old guys are not going to swashbuckle. They just aren't.)
But one more time, for posterity.
Q4 GDP 0.4%, and first look was 0.0% and voila, that's why Bernanke risked the Fed's independence by triggering QE 1 month before a close presidential election. That 0.0% was WITH QE running.
Q1 GDP projected to 3% on inventory bounce from 0.4, and the 2nd look says 2.4% is all we get -- WITH QE.
Projected Q2 GDP for this quarter . . . 1.6%. WITH QE, but WITHOUT the DoD furloughs of the Sequester, which don't start til July.
So . . . how can he remove QE if with it all he can get is 1.6% with it running.
Oh, and those guys saying a lower deficit means he runs out of bonds to buy don't know what they're talking about. It is illegal for the Fed to buy at auction. PDs do. Ben buys from the PDs. AND HE CAN PAY ANY PRICE HE WANTS, HIGHER. So if Treasury sold 50B to the PDs and Ben wants to inject $60B, he'll just pay the PD $60B and the PD doesn't complain.
"they're getting away with murder." it's as simple as that. you're fighting the Fed AND the tape when you start calling tops and bottoms. believe me i understand the frustration. we're all gonna be on EBT and subsidized suburban housing checks soon. "does that come with a fuel card" would be my only question.
Rate rises in UST 10's are killing the yen carry trade. Every time rates rise here, Japan and Hong Kong shit the bed over there as the price of 10's falls the carry trade suddenly becomes suicidal. We will hear about some of the damages that occurred from 2.3% maybe a few months from now. Ben is going to have to start keeping pace with Kuroda if he hopes to keep a lid on bond yields and a floor to stocks. If he even just thinks of even just a pussy taper the carry unwind will take a dump on his head faster than you can say Bernankeabe.
Agreed, the loss of control will acknoledged when the 10Y will yield double digits.
For now I COVERED MY SHORT TREASURIES BITCHEZ YESTERDAY!
Wait for the 10Y to go under 2% and short again in the knee jerk rally, because base money is doing wonders in pushing prices up as the PPI shows...
The Fed never had control, it's all a sham. Now it will haltingly follow the Bond yields. It has no choice. The good news is the rates need to go up somewhat and they aren't going out of control, not at this labor force participation rate.
The muddling, slow-motion train wreck looks to continue on course...
OMFG do you have a degree in economics? How could you be so prophetic otherwise? Mr. Obvious strikes again.
Anyone loaning $ to the gov't deserves the harshest ass fucking available.
That would be your pension money.
Bonds are the next bubble but it doesn't stop there?
So many bubbles it reminds me of the original Willie Wonka when the kid and the old man sip on that old Wonka soda shit and get lighter and lighter with all the bubbles and at first it's all nice and shit... until they rise up and keep rising up and almost get chopped up in that scary ass fan at the top of the room... they started burping and drifted down and were ok, but I see no burp here but rather a rather sudden oh shit moment when everyone realizes were are hitting the fan...
Fizzy Lifting Drinks.
Fed Lifting Drinks
UST yields will not be allowed to rise. The fallout would be too terrible. It can never appear that the Emperor has no clothes.
In fact, yields will go negative. You will have to PAY the Government for the privilege of keeping your $$ safe. Just watch.
the 10yr is going to back off to 2%. Maybe a bit lower. Then we chop back up above this range.
Yep, more ZIRP or whatever is required to hold those interest rates near zero, 0%, nada. Besides the payments on natl debts due to increased interest rates would tank the economy. Best investment is to go long on ink and paper. It's a can't lose bet with Helicopter Ben at the helm.
The Nanny State has run out of supplementary taxpayers monies. Time for another round of government heroin infused taxpayer stimulus program to shape up short term goals.
Dude it's all paper. Paper, paper paper. It's a fucking silly ass game. Or at least it would be a game if there weren't innocent lives at stake. Don't ever forget this. You allow some rat fucks to issue paper money, that means they control capital markets. People die.
Paper Money-->Bubble-->Recession-->Stimulus-->Imflation-->Price Controls-->Shortages-->Riots-->Troops On Your Street
So we're at inflation right?
Up .77 from the July lows.
George Osborne sycophants will be sound boarding his skin flute talents.
Budget 2012: will 100-year bonds work?
I bought some bond funds last year just to crash this bitch. Took a while tho.
There is one big azz computer and program in the Fed basement. This thing will go on as long as they want it too. They are trading with computer digits. It will come down at a time of their choosing. Stop gambling and exit now or you deserve what you get. When you engage in false weights and measures you will get them as payment.
All you hear about is negative news. Economies around the world (not just ours) are struggling, yet, we keep hearing this pathetic lie that our jobs market keeps improving. They obviously forgot about the millions who have yet to find work.
Our leaders keep trying to tell us the entire economy is improving. If so, that's news to at least 70% of Americans.
We still have 22 million Americans out of work, or under-employed, since 2009, we have 50 million (MORE) Americans are receiving food stamps. College grads can't find decent work, yet, everything is fine.
Central banks around the world are implementing their own version QE, and adding to the growing debt problems of each country.
In the end, they bail, and people are left holding the bag. Shameful.
The desperate and obviously failed status quo in this country....it knows nothing more than lying.
The job market IS improving: More people are drinking themselves to death and, thus, the need for bartenders and wait staff has skyrocketed. Before this is all over--next week? August at the latest--America will be a perfectly bifurcated country; half the country will be sitting in bars drinking themselves to death; the other half will be serving the drinks. EBT isn't just for breakfast anymore...
I'm hedged; I have been saving the cans.
The mess with jobs, particularly for college graduates, started after the dot-com bust of 2001-2002. H-1B's imported in preference to employing the hoardest of Americans who studied to become engineers, web designers, and the like. The rest, including the replacement of equity with debt in the housing bubble that ensued, and the subsequent crash, can all be traced back to the economy failing to appropriately reconstruct itself after the 2001-2002 time frame.
In other words, the terrorists won.
Bond bubble threatens financial system, Bank of England director warns
http://www.guardian.co.uk/business/2013/jun/12/bond-bubble-threatens-financial-system?CMP=twt_gu
"Let's be clear. We've intentionally blown the biggest government bond bubble in history," Haldane said. "We need to be vigilant to the consequences of that bubble deflating more quickly than [we] might otherwise have wanted."
Funny, I also saved that quote for posteriority...
When I first read that quote I immediately put in a category; official anouncements that re-state the obvious and refuse to acknowledge reality. eg. it doesn't matter how "vigilant" he thinks he's going to be; there isn't a damn thing he can go about it. When the market is fed up with Bonds; they'll be fed up with Bonds, and all the vigilant Central Bankers and all the King's Men won't be able to put Humpty Dumpty back together again.
So anyway i ben drinkin....whats the trade long long bonds?? or long dong bonds????
SOMETHING SOMETHING BUY GOLD SOMETHING SOMETHING
This cuntry needs MOAR SECRET COURTS.
This Country needs an 'Enema'.
If we could only flush out ALL of the shit of DC and Wall St. with an enema bag... :)
I'm tired Bitchez. You ass clowns will love this!
http://www.urbandictionary.com/define.php?term=devirginized
Double Checked Girley Boyz> POOF
How can interest rates ever go up again. Impossible under the current regime .Yellen will be moar of the same.
When TSHTF the 30 will go negative and will be seen as a good deal!
So wait a second...I thought we were going to face hyperinflation...but you think we are going to face massive deflation? So owning dollars would be better than say owning gold?
LOL you are literally clueless just like 95% of other idiots who post on these whackjob articles.
Interest rate concerns should hit the stock market too. Equities are no safe haven. Anyone who believes that the stock market is not correlated to moves in interest rates needs to re-exmine past stock market returns. In fact one common explanation for past increases in stock prices and p.e. ratios has been declines in long term interest rates.
This is all nonsense, see what Greenspan said and is Fed policy regarding paying the federal debt. All they are doing is steering perception in this never ending fictional chess game
GREENSPAN: "U.S. CAN JUST PRINT MONEY TO PAY IT'S DEBT"https://www.youtube.com/watch?v=jB0lcX-GtOU
Wheres my popcorn?