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10 Year Breakdown To 2.4% Possible BofA Warns

Tyler Durden's picture




 

As one well-known trader noted - referring to the current move in the US Treasury complex - "rubber, meet road."With the death cross (50DMA crossing below the 200DMA) for bond yields and a crucial trendline having been tested now numerous times (building up its importance), it seems we are about to find out just how much "growth" stocks really do reflect the reality of 'ungrowth' in bonds and vice versa. A break of 2.64% in 10Y yield could be a critical floodgate the Fed does not want opened. As BofAML's Macneil Curry warns, 10Y Treasury bears beware, a break below this level opens up a drop to 2.399%.

 

A close-up on the trends (and death cross)...

h/t @Not_Jim_Cramer

 

As BofAML's Macneil Curry warns US Treasury Bears Beware...

US 10yr yields are approaching PIVOTAL resistance at 2.629%/2.608%. Against here we remain bearish 10s.

HOWEVER, a break below would say we are wrong, exposing the Oct'13 low and multi-year pivot zone between 2.469%/2.399%

 

 

And he is fearful that USDJPY is about to break support also

 

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Thu, 04/10/2014 - 11:32 | 4643405 jefferson32
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Hong Kong and Shanghai unveil plan to link bourses

Investors in Hong Kong and Shanghai will soon be able to trade shares in each other's equity markets, a significant development in China's broad efforts to open up its financial system to the world.

http://www.cnbc.com/id/101571713

Thu, 04/10/2014 - 11:39 | 4643443 ArkansasAngie
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What's a little bubble here and there amongst friends.

The Fed doesn't want 10 years to go down?

Boy howdy these guys want their cake and to eat it too.

So ... maybe now is the time to go borrow a bunch of money?  nah.

So ... maybe now is the time to buy 10 year treasuries?  nah.

You guys go find some other sucker.

Thu, 04/10/2014 - 11:53 | 4643545 LawsofPhysics
LawsofPhysics's picture

Exactly, but who needs suckers when you can simply directly monetize, for now...

Thu, 04/10/2014 - 11:56 | 4643561 CrashisOptimistic
CrashisOptimistic's picture

Now?

Treasury yields have been falling for 30 years.  What do you mean "now"?  What is it that you think is different?

Is GDP now going to be more vibrant than the past 30 years?  It's economic strength that drives yields up.  It's economic weakness that drives yields down.  So why do you see near term economic strength?  Or long term?

 

Thu, 04/10/2014 - 12:02 | 4643602 LawsofPhysics
LawsofPhysics's picture

You do realize that you are arguing about "price" in a world where "price discovery" is forebidden?

The fucking price will be whatver the moneychangers fucking want it to be, again, for now...

Thu, 04/10/2014 - 12:05 | 4643623 CrashisOptimistic
CrashisOptimistic's picture

Somewhat, LoPdood. I don't hugely disagree with that.

I just emphasize that if it is so, then it has been so for 30 years and nothing is going to change in that.

I will say there is one risk to it.

Oil $200.

Thu, 04/10/2014 - 12:11 | 4643660 LawsofPhysics
LawsofPhysics's picture

Of course.  This was a contributor to 2008/2009.

look, forget about all the paper bullshit.  At the end of the day, in the real world you need calories in order to get anything done or built etc.

If you don't have calories (energy) you can't actually do shit.

nature bats last, and she's a real bitch sometimes.

hedge accordingly.

Thu, 04/10/2014 - 12:18 | 4643709 CrashisOptimistic
CrashisOptimistic's picture

BTW has anyone else noticed that finance.yahoo.com can't get the price of fucking oil correct to save their lives.

It's $103.  Not $95.

Thu, 04/10/2014 - 12:20 | 4643724 LawsofPhysics
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Just another "crack" in the facade...

 

Thu, 04/10/2014 - 11:45 | 4643412 Dr. Engali
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 Before this is over yields will be lower than 2.4%. How is that flattening curve treating you BAC?

Thu, 04/10/2014 - 11:46 | 4643499 Winston Churchill
Winston Churchill's picture

Probably go negative just before the dollar collapses in this casino.

Rush to percieved safety, followed by the ultimate muppeting.

Thu, 04/10/2014 - 11:37 | 4643439 new game
new game's picture

this is the plan to keep housing on track - tally ho...

(we buy a payment)

Thu, 04/10/2014 - 11:39 | 4643452 Rockatanski
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help me out here. so high is bad because of the interest and low is bad why? bonds are so mysterious.

Thu, 04/10/2014 - 11:54 | 4643541 new game
new game's picture

low is good if you have bonds higher. the delta can be some nice percentage gains if you decide to sell. bonds are extremely liquid. 

Thu, 04/10/2014 - 12:44 | 4643840 elwind45
elwind45's picture

Bond yields heading lower because everyone is not just watching hoarders they are starting to act like them?

Thu, 04/10/2014 - 11:40 | 4643456 youngman
youngman's picture

Credit card interest rates will jump to 50% to cover the bank profits....its the only way..or they need to invent a new thing to sell....more synthetic deritives...

Thu, 04/10/2014 - 11:40 | 4643457 hotrod
hotrod's picture

Why wouldn't yields drop, Greece, Spain etc. hardly paying a thing for their debt, demand so high.  Scare everyone out of everything else.

 

 

Thu, 04/10/2014 - 11:40 | 4643462 Yen Cross
Yen Cross's picture

  The carry trade is unwinding. It's going to be ugly in Asia later. The risk currencies like aud will come under pressure if things get much worse and traders run to the usd and bond market.

Thu, 04/10/2014 - 11:43 | 4643479 Two-bits
Two-bits's picture

The Aussies have their own problems right now, like a Cat 5 storm aimed at the sugar cane fields.

Thu, 04/10/2014 - 11:44 | 4643482 Yen Cross
Yen Cross's picture

   Not good . I did not know that. Thanks for the info.

Thu, 04/10/2014 - 11:55 | 4643556 Bangin7GramRocks
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No problem for America. Our obese monsters only graze on corn syrup.

Thu, 04/10/2014 - 13:06 | 4643946 Two-bits
Two-bits's picture

Trying to add what I can while I get a ring side seat to the end of the dollar.

Thu, 04/10/2014 - 13:44 | 4644062 Anusocracy
Anusocracy's picture

Oh no!

There go the cane toads.

Thu, 04/10/2014 - 11:45 | 4643463 new game
new game's picture

serious bond move today-is this thing getting disorderly?

nothing to do with about fifteen negatives going on...

and then that dollar, hmmm

inflections everywhere.

think this is about to leave one hell of a shit stain on the carpet.

Thu, 04/10/2014 - 11:41 | 4643466 NOTaREALmerican
NOTaREALmerican's picture

Well,  low interest rates means the job creators will take more risk floating all the boats higher. 

Isn't that right?

Thu, 04/10/2014 - 11:45 | 4643490 new game
new game's picture

i think one could let japan be your guide to the future...

Thu, 04/10/2014 - 11:48 | 4643510 Winston Churchill
Winston Churchill's picture

Optimist.

Thu, 04/10/2014 - 11:51 | 4643523 new game
new game's picture

i just don't see how the cb's can change course - lol to your comment

Thu, 04/10/2014 - 11:59 | 4643583 CrashisOptimistic
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The generic comment about Japan being the future doesn't focus onto the details.

If Japan is the future, then bond yields are going sub 1%, and if you hold them now you're going to make a lot of money.

Thu, 04/10/2014 - 11:45 | 4643491 mayhem_korner
mayhem_korner's picture

 

 

A bank "warning" of a break to lower interest rates???

O please don't throw me into the briar patch.

Thu, 04/10/2014 - 11:45 | 4643492 Glass Seagull
Glass Seagull's picture

 

 

That's close enough to the convexity hedge level of 2.25% (basis 10-year UST) to potentially see convexity hedges lifted and a feedback of short covering in the 10-year futures.

 

Remember, it was these hedges (hedging of MBS by selling 10-year futures) going on in June of last year that exascerbated the UST decline.  Can also work in reverse. 

 

Thu, 04/10/2014 - 11:51 | 4643525 Grande Tetons
Grande Tetons's picture

Thanks for the post! Just to be clear you are making reference to th 2.4ish to 2.7ish spike last year....Juneish. 

Thu, 04/10/2014 - 12:00 | 4643590 Glass Seagull
Glass Seagull's picture

More like ~2.2-2.7 during 3 week starting ~6/15, but yes.

Thu, 04/10/2014 - 11:46 | 4643495 29.5 hours
29.5 hours's picture

 

 

I missed the boat on the Greek bond sales. Damn. I'm too depressed about that to worry about U.S. 10-yr yields...

 

 

Thu, 04/10/2014 - 11:47 | 4643507 q99x2
q99x2's picture

I haven't seen any photos out of Greece lately. Maybe they are all dead by now.

Thu, 04/10/2014 - 11:52 | 4643531 LawsofPhysics
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"A break of 2.64% in 10Y yield could be a critical floodgate the Fed does not want opened." --

 

Bullshit, are we to believe that someone else wants to buy our paper??!?!?!

 

LMFAO!!!

The Fed would love this (as they would no longer have to print and buy...

Halarious.

Thu, 04/10/2014 - 11:57 | 4643574 yogibear
yogibear's picture

Only the Fed will want to own this crap paper.

Their trying to squeeze more people into stocks.

Getting around the time to crash the US dollar. It's value is way too high anyway.

Thu, 04/10/2014 - 12:03 | 4643609 CrashisOptimistic
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Central banks will not allow the USD to fall because that hurts other countries' exports.

You guys just don't get it.  Bond yields rise if economic activity is explosively strong.  Who sees that?  Anyone?

No.  No one.  Economic strength is weakening AND HAS BEEN FOR 30 YEARS.  Which, btw, is why yields have been falling for 30 years.

Nothing has changed.  There is no sudden manifestation of economic vibrancy.  It's all shit.  And so bond yields will fall.

That's what deflation does.

Thu, 04/10/2014 - 12:08 | 4643639 NOTaREALmerican
NOTaREALmerican's picture

Re:  That's what deflation does.

This is a hard concept to accept, even tho bonds and (gasp) gold are reflecting this.

Thu, 04/10/2014 - 12:22 | 4643683 LawsofPhysics
LawsofPhysics's picture

Deflation?

LMFAO!!!!  Yeah, I really hate it when the input costs for my business go down.

/s

morons.

You guys act like there is a mechanism for true price discovery, there isn't.  Your statements might apply if the bonds weren't being bought by "money" created out of thin fucking air (direct monetization you ignorant fucks).  Once the QE stops, then we might get to see if there is any correlation between interet rates and "economic activity", not before. 

Thu, 04/10/2014 - 12:31 | 4643774 NOTaREALmerican
NOTaREALmerican's picture

Well,  eventually, we'll find out.

Thu, 04/10/2014 - 12:31 | 4643773 ChanceIs
ChanceIs's picture

Have to go with LawsOfPhysics comment:

These markets are TOTALLY manipulated.  Fundamentals don't mean anything anymore.  Tradition may or may not mean something.  For example, the world traditional flees to the safety of US Treasuries.  We saw a bump up in Treasuries when things got hot with Crimea.  We may be seeing the same thing as temps rise in eastern Ukraine.  In this instance - and since probably the tech bubble in 2000 - flight to safety in the US is stoooooopid.  Because all we do is print money, and put more people on the government tit.  The "full faith and credit" of the US means less and less every day.  My heart aches about this, but the truth is the truth.  Another flight to safety is out of US stocks and into US Treasuries.  The market has been getting a little squirmy, and bonds have been rising.  All this is normal - and quite stupid.  But these are traditions.

The smart thing is to flee into gold.

I don't know how long these "traditions" will last.  My guess is that they will dominate the next "panic."

Some suggest that the Plunge Protection Team will foment a stock collapse in order to drive the sheep into Treasuries if the government's borrowing costs start to rise - as they have been.

In a normal world, smart money would be shorting Treasuries today.  Nothing is normal anymore.

 

Thu, 04/10/2014 - 12:08 | 4643643 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

It's funny how a lot of people thought that the Fed losing control of interest rates--higher-- was going to be the "issue." Instead it is this deflationary, recessionary spiral into lower rates that will crack us. 

Thu, 04/10/2014 - 12:13 | 4643671 LawsofPhysics
LawsofPhysics's picture

"Instead it is this deflationary, recessionary spiral into lower rates that will crack us.  -

LMFAO!!!!  Yeah, I really hate it when the input costs for my business go down.

/s

morons.

Thu, 04/10/2014 - 13:03 | 4643931 Rockatanski
Rockatanski's picture

i agree to an extent...... my cost of doing business is NOT going down but what is going DOWN is my profit margin. my industry is seeing deflation in the costs of goods sold to my wholesale customers.

mostly due to decreased retail customers, my wholesalers are looking for better prices and shopping prices. someone will always under cut the next guy just to get a sale.

so i see inflation in neccesities (the wife tells me about the food bill) and i see deflation in the fluff of our economy (the crap we dont need, like what i sell, the golfing industry).

Thu, 04/10/2014 - 13:10 | 4643967 elwind45
elwind45's picture

Keep raising your price and blame the gobmint

Thu, 04/10/2014 - 12:12 | 4643664 joego1
joego1's picture

A break of 2.64% in 10Y SCREECH

Thu, 04/10/2014 - 12:37 | 4643797 Fred Hayek
Fred Hayek's picture

You mean, while actual inflation is 9%-10% and Fed money printing credit creation is mapped by a hyperbolic function rise, the U.S. Government will let me give them a lot of my money and trust them for ten years as they pay me interest at a fraction of that real inflation?  Oh boy, where so I sign up?

It's not like we have intractable debt problems or unfunded government liabilities many multiples of the nation's annual GDP already hanging over our heads.  Can I play the part of the dupe, too, Mr. Federal Government?  Please!?!?

Thu, 04/10/2014 - 13:13 | 4643973 elwind45
elwind45's picture

Intractable debt problem is DEFLATIONARY please

Thu, 04/10/2014 - 13:37 | 4644036 wearef_ckedwith...
wearef_ckedwithnohope's picture

Isn't this good for one more shot at refinancing a 15 year mortgage or 15 year fixed home equity loan?

10 year tied to mortgage rates?

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