It's Getting Congested: The World's "Three Handle" Ten Year Bonds

Tyler Durden's picture

Forget "the 1%-ers", meet the 3%-ers. As US Treasuries sell-off and European bonds continues to surge, the 3% handle on government debt is becoming a crowded trade with the following six nations now yielding between 3 and 4%... US, UK, Ireland, Israel, and drum roll please... Italy and Spain!

  • US 3.008%
  • UK 3.044%
  • Ireland 3.389%
  • Israel 3.70%
  • Italy 3.98%
  • Spain 3.99%

Bear in mind that a year ago the spread between Spain and US was 350bps and is now less than some wierd world that all makes sense, we are sure.


Note today saw European stocks selling off (apart from Greece which roared 4% higher) but European bonds screamed lower in yield with Portuguese spreads 30bps tighter today alone and Spain and Italy 18bps tighter!! This is a perfect echo of 2013's first day ramp (and the biggest spread compression since 1/2/13!!)


Everyone front-running ECB QE?

Chart: Bloomberg

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BoNeSxxx's picture

Perfect for Bizzaro World... one-size fits all... No Pepsi, Coke.  No fries, chips!

nope-1004's picture

Entire fucking thing is fixed anyway.

For any of you that play poker for fun, this vid parallels the US economy.  The entire thing is rigged.

zaphod's picture

It makes sense for all gov bonds to track each other because they are all part of the fiat game. In the end if one goes, they all go, so yes their yields should track similar levels of risk.

BoNeSxxx's picture

<---- 1:1

<---- 1:100


Odds that 'Synchronized Printing' will become an Olympic sport?


EDIT: I just have to add the editorial comment: Sychronized Swimming is beyond retarded...

SafelyGraze's picture

good to see that after these european powerhouses got their productive capacities back in order, investors have recognized the value of lending into their continued growth


Beatscape's picture

Corzine's timing of his big (losing) bet on Euro bonds at MF Global was off by over a year.  This was the move he was looking for.  Timing is everything. 

eucalyptus's picture

wasn't liquid enough to ride it out.

MachoMan's picture

@ nope, ran into the same thing on a few sites in the mid 2000s...  This is my experience as well.  I think a lot of the free programs run some of the same algorithms...  they're meant to create conflict, which causes betting, which increases the take as well as give people they know are bound to lose the win in certain situations to keep them betting (it's like auto catch up on techmo bowl)...

If you want any chance of winning, then you have to alter your playstyle to accommodate the screwing you know you'll likely take as well as change the types of games you play.

fonestar's picture

End of free money bitchez!

Rip van Wrinkle's picture

Ain't gonna happen....or ain't gonna be allowed to happen.

Grande Tetons's picture

Three ply toilet paper. 

666's picture

Mr. Yellen can fix this problem with <CTL + PRINT>.

OwnSilverPlayMusic's picture

Debts don't matter, well just to your unborn children and grandchildren.  But ya know, shit happens.

Save_America1st's picture

Tick-Tock, bitchez...Tick-Tock...

ChaosEquilibrium's picture

I thought the game plan was for EVERYONE in the World to meet at 3.50%---it removes ANY differentiation of Risk----THE PLAN!


Of course everyone gave Japan a 'PASS' as not to uspet the Carry Trade!


WE NEVER SAW IT COMING!!!!!....OH Yea, here is a 40...I will tell you now it is coming!

disabledvet's picture

with taper on this puts te whole debt bubble right back on the table. if those yields in Europe blow sky high you're gonna need a Reorg "Continental Size."

Son of Captain Nemo's picture

More privitization in South Korea.

Hurry, somebody send John McCain to tell the South Koreans they are "Free" and that we'll stand by them while they are being looted -by us!

jubber's picture

that is one monster move in BTP especially as it opened lower

Cognitive Dissonance's picture

She's gonna blow.



CD           Yeah, it's gonna blow chunks when all of the above top 6%.

Dr. Engali's picture

Yellen better start untapering soon before rates get out if control.

Winston Churchill's picture

About 10 days before they unannounce the taper at the rate the 10  yr is rising.

The interest rate swap counterparty's must be getting a little twitchy right now.

Time for another Obozo/TBTF meet at the White Hut.

Musashi Miyamoto's picture

I predict an Un-Taper

eclectic syncretist's picture

An untaper so soon would be a blatant admission of mistake, which the Fed is incapable of.  Remember, any ligitimacy the Fed and the dollar have is based entirely on public confidence in their control of the situation.  Therefore, they will never admit or allow admission of a mistake.

Save_America1st's picture

eventually they'll roll out some new terminology for the same old bullshit...only next time they'll need to print 100 Billion/month or more.

Andy Hoffman recently did an interview with Kerry Lutz on the Financial Survival Network.  He does an interview once a week on there.

Andy Hoffman is really fuckin' sharp...he knows his numbers and what's really going on in the system. his last interview he said he crunched the numbers on what the Bernanke has been doing with QEternity, and he said the 10 Billion/month taper was totally priced in.  For the last year the Fed has actually been printing around 135 Billion...NOT 85 Billion.  Nobody really believed the Bernank was ever telling the truth about the 85 Billion anyway, did they? 

So they've been going along for a year at at least a clip of 135 Billion/month...even if they actually are "tapering" back by 10 Billion (which at this point I think we should seriously doubt they are), that means they're still printing at least 125 Billion/month.

I just went back and looked...I believe this is the interview from Dec. 26th:

They talk about all this in the first half of the interview...after that the 2nd half of the interview got really boring (because Kerry Lutz kept babbling on about nothing instead of letting Andy talk! lol)  But that first half is the key stuff though and is well worth the listen.

That bitch is going to print until there's no tomorrow and don't be surprised if they announce 100+ Billion sometime in the next few months.  Just my armchair quarterback prediction, but who knows...

mayhem_korner's picture



So, in sum, the US recovery is so robust that mere talk of tapering down to $75B/month is not sufficient to hold the 10yr below 3%, when it was 1.75% a year or so ago.  Got it.  What are they gonna fix next?

fuu's picture

Meanwhile the reverse-repo facility has added that $5B back already in interest payments. So the $5B saved from the taper actually just got moved over to something more arcane and hard to understand where no one will find it.

CrashisOptimistic's picture

FYI it's 2.98% 30 seconds ago, down from 3.03%.

chubbar's picture

I figure the ESF or whomever is putting on Interest Rate Swaps like crazy right now trying to beat down that yield below 3%. Any guesses how many trillions in swaps get recorded on the books of JP Morgan this month?

youngman's picture

This will be the story of 2014..the rising interest rates......

mayhem_korner's picture



Especially if Mr. Yellen cannot reign them in with an untaper courtesy of the new print-o-matic.

Boston's picture

Rising interest rates? Unless you believe the fiscal situation in Italy and Spain is better than that of the US, then this spread will almost certainly increase. 

Seems like a no-brainer---long the UA 10yr and short the Spanish/Italian 10yr.

Save_America1st's picture



90% of the American sheeple:  "Duuuuuhhhh...what does that mean?"  But they sure can tell you who won America's got the least talented dancer voice show, that's for sure!

ebworthen's picture


Central Banks losing control of bond rates?

Oh please!  It's all I want for 2014!  Please oh please oh please!

And bring the Gold Miner's back from the brink of doom while you're at it!

Benson's picture

I believe it is the big rotation, from usd to eur. Make sense, sir.

Dubaibanker's picture

I say all these Govts from Europe and USA are banding together...and they will take the rates higher and price of oil lower in the next 6 months or so....and then this will pull the rug from underneath all the emerging markets and others, except China (who has the cash to withstand the pressures and owns in excess of USD 5.65 trillion in assets globally).

Latin America where Venezuela has 56% inflation with quadrupling of homicide rates over 15 years or Middle East which is all on fire or India which is slowly going into a downward spiral or even Russia which has some troubles or many in Asia (Indonesia) or Africa (South Africa, Zimbabwe) will have devastating consequences if the US 10y yields were to rise to 4% which they must by end 2014. All the hot money and liquidity will evaporate making the emerging markets slow down and risky and volatile, playing the classic European and US crisis where the banks and the real estate plunge together. Social unrest will be just the begining of an extended crisis. Watch out for strikes and protests from Malaysia to Ukraine.

US and European companies have got their act together (have higher exports), have low rate bonds for last few years and enough cash and profits on balance sheets to withstand the coming hike in both Fed fund rates as well as 10y yields and if you must, the Libor. All these should be higher by 2015 if not within 2014. Expansion has stopped, productivity is higher. Higher yields indicate lower bond prices which makes the money move as losses of foreign investors (if they sell) to US and European companies or countries as gains (who can buy the same bonds with their own cash at a siginificant discount when the rates rise eventually).

So what, if the Italians own the iconic Chrysler? Foreign cash still moves into the US.

CrashisOptimistic's picture

and they will take the rates higher and price of oil lower in the next 6 months or so....and then this will pull the rug from underneath all the emerging markets


There is a major item emerged this morning about Bakken and Eagleford oil.  All oil is not the same.  Those oil sources have nearly no diesel and kerosene components in comparison to conventional oil sources like Nigeria.

This is simply huge.  The joules content isn't there.  Might as well count barrels of water in the total.

Dubaibanker's picture

I had a small typo...and then THEY will pull the rug from underneath all the emerging markets.

Thanks for bringing this to my attention. Shale oil production is awesome but the growth better maintain globally, because if one produces, then someone else must buy.

The problem, outside of oil and including oil is that everyone wants 'an export led recovery' but with de-globalization, self survival and self growth as the overiding national mottos and massive demand destruction due to wars, global trade remaining weak, who is buying all these 'exports'?

Shale oil is great and will replace huge oil demand for US which is very good for US, at the cost of Venezuala (who is incidentally importing lots of oil from the US now) as well as Nigeria and Saudi but if oil prices of OPEC and all oil goes down it hurts OPEC nations more than it will hurt the US and its economy.

Refining will be cheaper and prices will come down or be brought down. But the essential question of growth still remains as US miles traveled or retail car sales are on a declining path now hence the growth must come from overseas which is not happening because of wars, weak currencies and slowing exports for some and geo political issues etc.

Lets just hope fracking does not cause major crop damage or water damage signs of which have started appearing in USA across communities already.

There is a reason so many train blasts carrying oil have occured across US and Canada in just the last 1 year. Such frequency has never been seen before and nothing happens without a reason!

wallstreetaposteriori's picture

Markets really being mispriced if anyone thinks spain and Italy have no risk premium to US treasuries.  Markets are going to get destroyed, interest rate in the US are GOING LOWER from here.  I love everyones argument that bonds are in a bubble.  All the technicals in bonds point to something very different.  My response to anyone that thinks so is.... "if US treasuries, which are the worlds "safest" asset are in a bubble, than what does that say about every other asset blowing through new all time highs day after day at the moment".

The sheep cannot tame that insatiable risk appetite.  

markar's picture

I don't think the sheep are part of the equation.

Gromit's picture

Corzine's trade was correct.....just mistimed!

chubbar's picture

Doesn't seem to be bothering him though.

besnook's picture

deflation in the eurozone and inflation in the dollar?

debtor of last resort's picture

Three percenters followed by the four horsemen.

Woodhippie's picture

As a former Series 7 holder, I am a little embarrassed to ask this, but does any of you know anywhere on the net that explains bonds in an easy to follow format.  Like most brokers, we pounded info in our heads for long enough to pass the exam.  I have since misplaced the study material.

Looking for the "Crash Course" in the bond area.

Appreciate any help.  Thanks.'s picture

Tick tock, glitchez (in the bond market/auctions soon).

german Wunderkind's picture

i dont see problems... the us bonds have problems and the us goverment dont have an idea how to fix the debt. italy havnt got so much new debt every year and with berlusconi out of the way it mb can realy fix the problems.

spain has other problems and a totaly corrupt goverment and might fall apart in the near future. but europe will not let em fall.

jonytk's picture

Not totally corrupt, more like inept, they received unaccounted money from companies, construction companies, you know, "donations" as in the US, turns out in Spain any of those are illegal.