Someone Is Getting Nervous-er

Tyler Durden's picture

It would appear that Warren Buffett's reassurance this morning that crossing the debt ceiling won't be so bad (trumpeted by any and all equity pitch men since) is being entirely ignored by the bond market. 1-month Treasury bill yields are soaring this morning - up 5bps at 12.5bps now (having touched 16bps - the highest yield in almost 3 years and notably higher than during the 2011 debt ceiling debacle). 1Y USA CDS are also up 3bps at 38.5bps this morning - notably inverted still. Of course, equity markets are surging back to open green for retail investors ignoring Obama's warning last night and Lew's "default has potential to be catastrophic" note this morning. In the meantime, the 1M1Y flattener trade we suggested goes from strength to strength as an indicator of market stress.

 

Does this look like complacency? This is the biggest rise in USA CDS since 2009


The 1month bill yield (red) is spiking once again... indicating a growing fear of a missed payment...

 

and USA CDS continue to rise...

 

Chart: Bloomberg