Bonds Close 2013 At 30-Month High Yields

Tyler Durden's picture

The Treasury bond has now closed for 2013 with the (highest duration) 30Y Treasury Future down 13% for the year. Of course, those invested in fixed income are not all long the long-end but across the whole complex yields are at highs. 10Y ended at 3.03% - its highest since July 2011 and 30Y at 3.97% - its highest since August 2011. The short-end remains under control (though 15bps higher than its mid-November trough and double the May lows at 40bps) but the 7Y yield has surged back to 2013 highs also not seen since mid 2011. Perhaps most notable is that despite all these moves, 5s30s is unchanged on the year, while 2s10s is +120bps.



and the curves...

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aVileRat's picture

Please read the following in your best Barney Stinson voice:

Challenge accepted.


SDShack's picture

I'll raise you one Darth Vader "I find your lack of faith... disturbing!"

slotmouth's picture

What is the yield on a Corzine bail bond?

ChaosEquilibrium's picture

5s30s "unchanged"......MISSION ACCOMPLISHED.......for a little while longer.......BOOM!

knukles's picture

Lemme see here....
Much more of this and what other rates'll be rising?
Credit Card, Mortgage, Auto loans, Discounting at Payday Windows?
By gosh and by golly, Ben, you did it again!

I'd like to thank the Fed for this wonderful recovery.
Now, if they'd just get short rates up so Ma and Pa Kettle in Albuquerque could earn more on their savings....


I mean these higher rates are just gonna work so well opposite declining real after-tax disposable incomes, no?

SDShack's picture

Que Chucky Shumer... "Janet, get to work, we need Recovery Summer 6.0 to pay for 0zer0care!"

Meat Hammer's picture

Interest rates on savings, maybe?  Maybe my "high yield" savings account will explode above 1%.

Spitzer's picture

Why are stocks and shit going up while rates are rising ?

Because yields are still hugely, fucking,  negative.


stopcpdotcom's picture

How much higher does the 10 year have to go before the shit really hits the fan?

Spitzer's picture

Not if real inflation is around 6-8%

debtor of last resort's picture

And what's the psychological breaking point? I mean, the howling for moar QE is becoming deafening 'long' before 6% on the 10 year?

Imho, forget 6%, it'll break before it nears 5.

BandGap's picture

Above 3.5% and the frying pan is getting really hot. At 6% (which we will see for a nanosecond as part the explosion) it's Katie, bar the door.

aVileRat's picture

Yup, 360 bps is when most cov lites will begin to trigger. Most of them reset to the 500 range, which would take the HighYield index waaaay over 880.


CrashisOptimistic's picture

We have a balance between eroding economic realities and a pathological fear of deflation by the Fed, and toss in 17 Trillion in US debt just to make it complex.

The bond yield essentially can't move.  If it goes in either direction, disaster unfolds.

Boston's picture

How would a collapsing bond yield lead to disaster? On the contrary, it's the only way to keep this game going. See Japan.

CrashisOptimistic's picture

Well, maybe.  My thinking was it would trigger that Fed terror and increase printing.  Inflation would force rates up.

Boston's picture

Not much more.

Just think how the extra 160bp (from the lows) will hurt corporate borrowers, households (especially mortgage costs), and all levels of government borrowing. 

Unless spreads compress a lot further (doubtful given that they're already low, historically), or unless US economic growth has truly achieved 'excape velocity' (very doubtful; even Summers thinks we're in a secular 'depression'), this rise in the 10yr yield is already going to hurt a lot.

So either rates get 'managed' back down, asap, or the shit hits the fan.....over the next 3-6 months.

Kirk2NCC1701's picture

My name is Bond.  And I never get old.

khakuda's picture

The question is at what level do rates have to rise before the Fed decides to untaper and push them back down.  If housing slows or the stock market goes down 5%, we will find our answer.

Spitzer's picture

They wont care if rates keep rising as long as they stay negative

A 3% 10 year with no ill effects in the market is all the evidence you need to see that inflation is above 3%. Way above.


Hindenburg...Oh Man's picture

The Mainstream media and investment-talking-head community is now proclaiming how 3 percent on the 10 year doesn't matter, along with a taper. It's all rhetorical bullshit until the selling starts.


Spitzer's picture

All it shows is that inflation is above 3%.

But the bond market is so fucking stupid that they don't realize this yet.

So the 10 year at 3%, is still no yield at all.

Loophole's picture

My end of the year questions:

Has all the money printing since 2008 caused little or no inflation? Is it there but being hidden by BLS BS? Or is it lagging and will come roaring in when the economy really recovers?

Why aren't the Chinese bitching like hell because of our money printing as they were doing when we first started QE? Have we paid them off by "leasing" them the gold in Ft Knox (my theory) or what?

CrashisOptimistic's picture

Bitching doesn't put food on the table.  Only gradual divestiture does.

realWhiteNight123129's picture

It is only the end of the beginning.