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The Twist-er Tantrum: Bernanke Unleashes 5-Sigma Curve Flattening
Despite the absolute assurances (by your friendly local asset gatherer) that a taper would unleash hell in the bond markets, a decidedly one-sided market has seen a tremendous squeeze in the last 2 days. Echoing Operation Twist's effort, the term structure of Treasury yields has collapsed by 5 standard deviations to 3-month flats.
Our suspicion is that traders were positioned for a taper and weakness (steepening) in bonds and when that did not materialize in size, exits were hit in a hurry... either that or macroeconomic growth and reflation hopes and dreams are dashed in the reality of bond premia.
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If the market was a market and not manipulated by a bunch of addicts, some or all of this might be true. As it is ... nah. Interest rates will go up ... sooner than later.
You never hold enough bonds of the empire in financial facism. Hail mon fed!
This only happened because the economy is so good.
hahaha
Don't overthink this Angie, when fraud is the status quo, possession is the law.
I remain long sharecropping, physical assets, a dependable tribe, and a good corn mash (It's the holidays, so I "adapt" as it were, although the sorghum glut has resulted in a "rum experiment" - we'll see how that turns out).
RTFG.
Google my ass. There are people who are book smart, and those that can actually do...
What?
Google your ass?
Merely an acronym of your most appreciated repetitive post.
"Roll The Fuckin' Guillotines"
Sorry, I have a teen who says RTFG all the time (Read The Fucking Google)
I really need to stop trying to be so hip and trust in Jesus (with a .45)...
Therein lies the key truth. It is an insult to markets to call trading in US bonds and equities "markets."
The centally planned goal laid out over 5 years ago has been to lower borrowing costs and raise stock prices beyond what free markets would justify, and it is working.
The problem with central planners is that they are clearly going to overstay their welcome by forbiding any and all corrections. It ends when the excesses become SO large, that a crash is inevitable because the gap between prices and reality gets to the point that even a monkey can figure it out (unless he/she is a central planner).
The finale roll over to a complete fascists state is when the Fed dictates the bond price with 'backwardation' and complete assistance from the hedge fund managers. The pension fund (oldest and largest,'mining') are reciprocated as leveraged.
yep I remember Santelli saying last week, "we'll see what the bond market thinks about it when the Fed balance sheet reaches $4 Trillion", well fuck all by the look of it! 10y at the LOD and 30y bond futures up 130 pips !!!
way to go Bondzilla
CNBS is only on to catch Santelli but he's still an actor.
what did Obama's Navigators kill off all the bond vigalantes as well?
let me be clear, there is no market...
hedge accordingly.
HOW MANY TRILLIONS IN INTEREST RATE SWAP DERIVATIVES DID THE PRIMARY DEALERS PUT ON IN ORDER TO MANUFACTURE THE ILLUSION OF TREASURY DEMAND, THEREBY INITIATING A SHORT SQUEEZE.
THEY MANUFACTURED THE POST FOMC EQUITY SPIKE USING THE SAME DERIVITATIVE TYPE TOOLS [SEE THE VIX SMASH].
DID YOU GET THAT NSA - WE THE STUPID SHEEPLE SEE CLEARLY WHAT HAS TRANSPIRED.
caps lock says it better.
Since NSA is listening, let me add the following, "roll the motherfucking guillotines already".
Is there anyway to confirm that someone at NSA got this?
fuckers.
Lets be honest, the apes at the NSA can probably read that post and, with the aid of a dictionary, can understand all of the words but they still have no idea what you're saying. You give them too much credit to assume they have a hand in this behavior.
It might make sense the vigilantes are trying to flush that short duration trade to force the FED magic hand.
I had an interesting conversation last night with my Bitcoiner/Ron Paul friend. We were using Teamviewer so he could clean up my new Win8 infected comp. Invariably the conversation drifted to BitCoin. I had to ask because I knew he cleaned house. You want to take a guess how he did? Fonestar can put a cork in it. 3.4 million $ is how he did. $750,000 liquid.LOL Yeah he has about $60k in computer gear but still. This guy is actually the one who created the template for boating accident news.
The conversation was really interesting but what he had to say more so. He has deep insight into the crypto currencies obviously. I told him he has to write about his experience but he does not like to write. I will sumarize it for you. He said he would not neccessarily do it again. It was a game to him and he did it because he could. He did what he did because he liked the concept but now he is not so sure. He said that bitcoin is likely to fail but that some new form of crypto is likely the future. He is rather amazed by some of the posters on ZH regarding Bitcoin. He does not deny any of the claims we have all made against Bitcoin but he also added that it was meant to fuck with the central bankers. He doesn't care about the money part but rather the fact that it's been a big "Fuck You" package for the central bankers.
That is what Bitcoin was meant to do, fuck with the banksters. True bitcoiners are libertarians and they don't brag. It has been interesting to watch the whole thing unfold. I hope I can get my friend to write his experiences down. If he does not, and he probably won't, I will also add that he mentioned that bitcoin is not a substitute for gold and silver and that bitcoins should be converted to gold and silver. He seems to think silver is a good deal right now. I do not doubt that. He likes my silver dimes idea. Good call and you also won't have FinCEN on your ass.LOL
More than likely along the lines we want a fiat currency of our own and stuff you. SWEET PAYBACK!
Actually this the most plausible explanation of what happend. Still a fiat currency though is it not? But with one twist. THE RECORDS PART! WAY TO GO!
If all fiat was compelled to follow bitcoins example of recording in a public wallet to prevent fraud etc. That actually does screw the bankers over better than any previous legislation. Won't happen but just a thought.
The one thing bitcoin has done to really screw people over though is you will have to have a fiat wallet, legislated for by the whitehouse to legislate the bankers a financial drip feed of your wealth. On that bitcoin may have doomed the rest of the population to be the victims for the vampires forever. Bit like medical insurance companies and healthcare.
I can't speak for my friend per se. He knows the whole bitcoin thing so much better than I do. He is one of the 900. He does not see a strong future for bitcoin. He got rich doing it but he does not care about that at all. He is not a social person at all. He's an extremely intelligent guy obviously. The idea behind bitcoin was not to make money per se but just to fuck with the banks. These guys are computer wizards. I can hold my own but not like these guys can. They own it. They are not dickheads, perhaps a bit anti-social but I have no problem with that.:-)
Here is one other tidbit, I had to ask about the other 40 or so crypto currencies.(it was a three hour conversation) He said they are just variations of the original bitcoin code. I asked if he could make a "Boatcoin" for us. He said he could but asked why bother to do so and he said it would be a real pain in the ass to do. Then he rattled of a bunch of crypto stuff I didn't understand for about half an hour. Oh, OK then.LOL
I am not entirely stupid, close, but not entirely. I had to ask which is the next best crypto currency and he said Litecoin is the best value. He also went right back to gold and silver...especially silver.
2 reasons why I'm skeptical:
1 - If Bitcoin was meant to fuck with the bankers, and how your friend would know is just speculation anyway, then why are government run institutions accepting the currency? Why is the University of Cyprus accepting payment in Bitcoin? The test bed for banker bail in is opening it's borders to Bitcoin.... lmao. I mean, c'mon.... if it's so "alternative" and libertarian, then why is that happening?
2 - For every buyer there needs to be a seller. When you have an exponential price move, like we had, there had to be more buyers than sellers. This is either true in real life, as in more people actually bought Bitcoin and are currently holding the bag post correction, or the computer geeks managed to inflate the shit out of it and run it up using bankster-like algos. Those early in on it did well - but what's the truth? Is it a market? Or is it a computer driven hysteria?
If you look at our "markets" today, nothing is real. I heard many say leading up to the gov't hearings "you better buy Bitcoin now, it's going to skyrocket." So how did they know? Setup? I think the banks were complicit in its creation and deployment.
Your friend says it was a game, but I think the whole Bitcoin notion is/was one big game. Which is why fonestar coming on here talking about it and its future value at 100x gold is totally naive. He was here to drive up value for himself, and now that it has corrected, he's crawled back under his rock.
My biggest problem with bitcoin is the following:
What is to stop the Fed and/or other CB scum from setting up a 100 odd entities, buying up say 80% of the existing bit coins (3 days of QEinf) and then writing algos to sell it back and forth between their cut-outs, just like they are doing with the S&P? Pump and dump.
The '14 budget deficit will be in excess of $1 T (already over $500 B) and that SS will need to sell off $50 B / yr in intra-gov debt for their deficits (they will be a net seller of $50 B where they were a net buyer of $50 B)...that is $1 T/yr "new" issuance and 2/3rds in notes/bonds...means bout $700 B/yr in new notes/bonds issuance. If the Fed does not buy in excess of their taper level of $480 B / yr their % of ownership of the outstanding debt will be decreasing!!!
The Fed will need something like a QE Treasury bond focused tripling (increase Treasury bond purchases to $1.5 T while maintaining MBS @ $400 B...or QE to $2 T annually) to even get moving toward a 50% ownership by 2016 (next Prez election).
@ Fonz - looked at the data you sent and your source was technically correct that the Fed was buying in excess of issuance last year but only due to the debt ceiling impasse. Once the debt ceiling was cleared, the issuance since Oct 15 has been huge to catch up. And look at the big picture of all note/bond debt instead of only @ 10yr which Fed is reaching 33% ownership. The big picture is the $10 T note/bond market which Fed "only" owns 20% of...and they are pushing the Foreign owners to the cheaper yielding debt but also closer to the exits...and put it all together...the world is using Yuan and Euro more and more to clear trade (less need of dollar reserves...and thus Treasury holdings) while the domestic market hasn't increased it holdings from $2.5 T since '00 and the Fed is "tapering" into a moment when they realistically need to be buying moar. This smells of a premeditated crash so the Fed can move in and triple or quadruple QE to "save us"...
THE WORD "MARKET" IS CONCEPTUALLY UNUSABLE ALONGSIDE THAT OF " 50% OWNERSHIP "
Define "ownership". When fraud is the status quo, possession is the law.
the next phase of the taper may be a change in the mix of assets they buy. the mortgage crisis on the banking side is almost over. the fed will soon have replaced enough of the crap on the books for the banks to be solvent on the issue. the fed could swap the amount of mbs they stop buying for treasuries. that should make everyone happy.
i think the taper is in anticipation of a very dangerous maneuver by the fed(or simply a failure to act in deference to yellen) to raise the long end high enough(3+) to give them enough room to bring it down 1.5 points as another round of printapalooza ensues.
they've been bailing out LEVERAGE since 2008...not the banks which are still as bankrupt now as they were in 2008...and "now we know what kind of leverage." everyone of these "crazy pants people" is massively short 30 year treasuries and levered to the moon. how the Fed cannot see this defies the very idea of belief. Rosengren gets it right in my view...this is a financial "furnace" and if you are trying to cover your short position by taking huge bets in gold or tech "look out below." obviously trying to do so in natural gas or oil is impossible because they markets are too large and liquid...this is especially true in natural gas where price moves are beyond belief volatile and when the market moves against you you're utterly obliterated. i could see a 1500 point drop in the Nasdaq on some type "algo malfunction" where instead of trades being cancelled as "being outside the normative form expectation based upon statistical methodology" but where that trade actually gets executed "at the 99% actual discounted price." http://kiddynamitesworld.com/dear-nyse-canceling-trades-destroys-the-int... where is the liquidity again? the Wall Street banks are NOT lending...that strikes me as the exact opposite of liquidity actually. by no means am i an expert by my understanding of a credit default "swap" is that it was insurance on this financial product: http://en.wikipedia.org/wiki/Collateralized_debt_obligation. well, obviously the CDS is of no value if the CDO (the underlying instrument) has no measurable worth or value but is simply a function of some type of "variation" to a "mean." in other words if i roll the dice 1000 times in a row...and it comes up heads every time...the next time i roll the dice...number 1001 to be precise...the odds of it coming heads again....IS STILL 50/50. in no way am i "in the know" like the Fed...but if the Fed is bailing out leverage instead of balance sheets you could very well end up bailing INTO a directional bet that is levered...BUT WRONG. in other words "something in the future" and not an asset (something that has actual collateral backing it...not a "50/50 chance of working out in the future"). not saying that's what is happening...but this sure has the feel of an "echo" of 2008 only "where the exact wrong lessons were learned." http://www.youtube.com/watch?v=fnwvZcb9EEM