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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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Tue, 12/31/2013 - 15:33 | 4289188 VD
VD's picture

bring it!

Tue, 12/31/2013 - 15:53 | 4289240 aVileRat
aVileRat's picture

Please read the following in your best Barney Stinson voice:

Challenge accepted.

 

Tue, 12/31/2013 - 16:00 | 4289260 SDShack
SDShack's picture

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

Tue, 12/31/2013 - 16:00 | 4289250 slotmouth
slotmouth's picture

What is the yield on a Corzine bail bond?

Tue, 12/31/2013 - 15:36 | 4289191 ChaosEquilibrium
ChaosEquilibrium's picture

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

Tue, 12/31/2013 - 15:52 | 4289194 knukles
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?

Tue, 12/31/2013 - 16:02 | 4289252 SDShack
SDShack's picture

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

Tue, 12/31/2013 - 15:57 | 4289254 Meat Hammer
Meat Hammer's picture

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

Tue, 12/31/2013 - 16:21 | 4289312 Spitzer
Spitzer's picture

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

Because yields are still hugely, fucking,  negative.

 

Tue, 12/31/2013 - 15:46 | 4289223 stopcpdotcom
stopcpdotcom's picture

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

Tue, 12/31/2013 - 16:08 | 4289273 Gankfest
Gankfest's picture

Roughly 6 - 8%

Tue, 12/31/2013 - 16:20 | 4289322 Spitzer
Spitzer's picture

Not if real inflation is around 6-8%

Tue, 12/31/2013 - 16:51 | 4289408 debtor of last ...
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.

Tue, 12/31/2013 - 16:14 | 4289296 BandGap
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.

Tue, 12/31/2013 - 17:01 | 4289444 aVileRat
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.

 

Tue, 12/31/2013 - 16:16 | 4289300 CrashisOptimistic
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.

Tue, 12/31/2013 - 16:31 | 4289364 Boston
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.

Tue, 12/31/2013 - 17:52 | 4289573 CrashisOptimistic
CrashisOptimistic's picture

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

Tue, 12/31/2013 - 16:29 | 4289330 Boston
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.

Tue, 12/31/2013 - 15:50 | 4289232 Kirk2NCC1701
Kirk2NCC1701's picture

My name is Bond.  And I never get old.

Tue, 12/31/2013 - 16:25 | 4289309 khakuda
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.

Tue, 12/31/2013 - 16:25 | 4289342 Spitzer
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.

 

Tue, 12/31/2013 - 16:23 | 4289334 Hindenburg...Oh Man
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.

 

Tue, 12/31/2013 - 16:29 | 4289356 Spitzer
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.

Tue, 12/31/2013 - 17:45 | 4289568 Loophole
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?

Tue, 12/31/2013 - 17:54 | 4289595 CrashisOptimistic
CrashisOptimistic's picture

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

Wed, 01/01/2014 - 12:08 | 4290780 realWhiteNight123129
realWhiteNight123129's picture

It is only the end of the beginning.

 

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