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10Y Treasury Yield Hits 2.40%

Tyler Durden's picture




 

It seems shorts keep covering and the Chinese keep buying (through Belgium of course - as they sell CNY, buy USD, and grab the extra yield on Treasuries). Despite stocks relative stability, 10Y yields have just hit 2.40% for the first time in over 11 months (as USDJPY broke down). It seems this morning's dismal GDP print was just enough to confirm the growth/inflation slowing meme (in bond investors' minds) and the yield curve is flattening even further...

10Y at 11 month lows at 2.40%

 

Led by USDJPY

 

As the divergence grows...

 

Why are they buying Treasuries? because they offer great yield pick up - unbelievably...

 

Charts: Bloomberg

 

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Thu, 05/29/2014 - 11:13 | 4805685 THX 1178
THX 1178's picture

Whoever is loading up on USTs must know that they will be destroyed.

Thu, 05/29/2014 - 11:16 | 4805701 FieldingMellish
FieldingMellish's picture

I doubt it. Treasuries will remain in low-yield mode for a long time. The currency they are denominated in... well.

Thu, 05/29/2014 - 11:22 | 4805724 CrashisOptimistic
CrashisOptimistic's picture

1) Japan is at 0.5%.  They have no growth.  Why would the US be different?

2) Oil has been north of $100 most if not almost all of the year.  How do you grow with that?  In fact, it's not spoken of, but I will GUARANTEE you that if that price went to $93 you would hear every single hour what a boost this will be to GDP.

3) If you've been in bonds you've made a lot of money this year on the yield fall.  There's a lot more to be made between here and 0.5%

Thu, 05/29/2014 - 11:26 | 4805738 nope-1004
nope-1004's picture

Fed is buying their own garbage to keep the ponzi afloat, in cooperation with foreign CB's.  One day the Fed will outright own everything, then there will be no negative economic news whatsoever.

 

 

Thu, 05/29/2014 - 11:29 | 4805754 LawsofPhysics
LawsofPhysics's picture

By design.  Yes, "ownership" has it's privileges (well at least as long as you can keep your head out of a guillotine)

Thu, 05/29/2014 - 11:45 | 4805802 john39
john39's picture

isn't it obvious how they plan to wrap this up?  all fortold long ago in that silly work of fiction, the protocols:

10. When we ascend the throne of the world all these financial and similar shifts, as being not in accord with our interests, will be swept away so as not to leave a trace, as also will be destroyed all money markets, since we shall not allow the prestige of our power to be shaken by fluctuations of prices set upon our values, which we shall announce by law at the price which represents their full worth without any possibility of lowering or raising.

11. We shall replace the money markets by grandiose government credit institutions, the object of which will be to fix the price of industrial values in accordance with government views. These institutions will be in a position to fling upon the market five hundred millions of industrial paper in one day, or to buy up for the same amount. In this way all industrial undertakings will come into dependence upon us. You may imagine for yourselves what immense power we shall thereby secure for ourselves ....

whether this book is a frame up, hard to say.  what does seem obvious, the plan as laid out has largely come true...

Thu, 05/29/2014 - 12:03 | 4805867 Chief Wonder Bread
Chief Wonder Bread's picture

I'm waiting for the 30y to hit 10 basis pts.

That will be a good day to die.

Thu, 05/29/2014 - 12:37 | 4806010 StacksOnStacks
StacksOnStacks's picture

_________ hits _________!!!  BULLISH!

Thu, 05/29/2014 - 11:41 | 4805788 intotheblack
intotheblack's picture

Yes, own everything, like the Pharoah of Torah during the seven lean years when every Egyptian sold his birthright in return for grain. Slavery is the next logical step after the consolidation phase. I am very bad at making mudbricks so I always carry a cache of cyanide capsules.

Thu, 05/29/2014 - 11:23 | 4805741 Boston
Boston's picture

Exactly!

Thu, 05/29/2014 - 11:21 | 4805728 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

I always wanted some China in my portfolio.

Thu, 05/29/2014 - 11:29 | 4805755 THX 1178
THX 1178's picture

Sure, what i mean is that USTs are denominated in USD, therefore they will be destroyed thrugh inflation.

Thu, 05/29/2014 - 11:54 | 4805832 Flakmeister
Flakmeister's picture

Beg pardon?

The only thing that destroys the USD, and hence USTs, is the event that ends convertability of USD into imported oil...

Until then, party on...

Thu, 05/29/2014 - 11:58 | 4805846 disabledvet
disabledvet's picture

You have to add natural gas to that too.

Thu, 05/29/2014 - 11:43 | 4805791 Dr. Engali
Dr. Engali's picture

If you buy a ten year now and the yield eventually hit 1% who is the one who got destroyed?

Thu, 05/29/2014 - 11:45 | 4805800 CrashisOptimistic
CrashisOptimistic's picture

Doc, if it were any year but now, you have to worry a bit.

But it's an election year, the GOP is pointed at big gains, and the govt can't create stimulus -- it's locked into a Sequester budget out to March. 

There isn't going to be fiscal injection of stimulus to goose growth, and that's pretty much all that sends yields up.

One other thing might.  Total and complete resolution of Libya that flows 1 mbpd of their uber high quality oil.  That could take the price down and goose GDP.

But no sign of it.

Thu, 05/29/2014 - 13:14 | 4806237 firstdivision
firstdivision's picture

Yield down, stocks up, vix up, oil up.  The only thing down on the day is reality.

Thu, 05/29/2014 - 11:14 | 4805691 Rainman
Rainman's picture

Just when I thought I was running out of WTF s !!

Thu, 05/29/2014 - 11:14 | 4805693 buzzsaw99
buzzsaw99's picture

gold is shit, bonds are the shiznit!

Thu, 05/29/2014 - 11:15 | 4805696 alien-IQ
alien-IQ's picture

what can possibly go wrong?

Thu, 05/29/2014 - 11:15 | 4805697 Bangin7GramRocks
Bangin7GramRocks's picture

Go Belgium!

Thu, 05/29/2014 - 12:07 | 4805882 Zirpedge
Zirpedge's picture

We may be underestimating the powerful draw of the investment broker in chief's MyRA plan. I'm not the only one loading up on treasuries, but great minds do think alike. Unlike the agitators and malcontents that are a bit too casual with the down votes in ZH land.

Thu, 05/29/2014 - 11:16 | 4805699 fonzannoon
fonzannoon's picture

http://finance.yahoo.com/q/bc?s=%5ETNX+Basic+Chart&t=2y

Yup i see some solid support.....down....way down....there....

But keep in mind negative gdp is rare for expansions. You can't dismiss that. That is why the market "will stop, when it stops, and not a day sooner".

words to go fucking nuts by

Thu, 05/29/2014 - 11:17 | 4805707 FieldingMellish
FieldingMellish's picture

You should charge $29.95 a month for advice like that.

Thu, 05/29/2014 - 11:19 | 4805716 fonzannoon
fonzannoon's picture

Maybe I will go with $29.94. Yeah...that's the ticket.

Thu, 05/29/2014 - 11:21 | 4805722 buzzsaw99
buzzsaw99's picture

you're coming around fonz, wtg

Thu, 05/29/2014 - 11:40 | 4805783 Dr. Engali
Dr. Engali's picture

It's great being Japan 2.0. The long term channel still hasn't been broken as we head down to 1%.

Thu, 05/29/2014 - 11:16 | 4805702 oklaboy
oklaboy's picture

3996....3996...3996....

Thu, 05/29/2014 - 11:20 | 4805721 buzzsaw99
buzzsaw99's picture

dr. copper calling in sick, corn getting cornholed...

Thu, 05/29/2014 - 13:10 | 4805969 Ham-bone
Ham-bone's picture

I'm not a gold bug but...

great news…there is nothing but bad news for PM's…PM companies slashing capex, slashing exploration, high grading production, and inputs (esp. oil) just keep rising…and still losing money. Demand continues ramping vs. present and future supply being slashed and inventory's drawndown, scrap sales really falling…if you love that which is unloved, there is no better news. The lower the prices go, the longer the price stays down is the greatest gift PM holders can ask for…and the greater the ultimate rebound.

From MW...

“In particular, the top 10 gold companies slashed capital expenditures by 25% to $16.6 billion, cut exploration expenditure by 33% to $1.2 billion, and decreased corporate costs by 8% to $1.2 billion, the Citi research said. The companies also prioritized higher grade ore in order to cut on-mine unit costs.

But despite these cost-cutting measures, Citi estimates that about 75% of the industry is still burning cash. “The fact that gold companies tend to burn cash in good or bad markets to us accentuates the industry’s poor fundamentals,” the analysts wrote.”

http://blogs.marketwatch.com/thetell/2014/05/29/gold-miners-are-stuck-in-a-cycle-of-value-destruction/?mod=MW_home_latest_news

Thu, 05/29/2014 - 11:22 | 4805733 Bay of Pigs
Bay of Pigs's picture

Look out below!!!

Thu, 05/29/2014 - 11:25 | 4805744 Boston
Boston's picture

That's been my line....for Treasuries....for the past few months!

Thu, 05/29/2014 - 11:27 | 4805748 maskone909
maskone909's picture

its raining bonds

from a lacerated sky

Thu, 05/29/2014 - 11:30 | 4805763 Flakmeister
Flakmeister's picture

To all those in the "Long Gold Short UST" pairs trade:

Just how did Ed Norton feel in that prison shower scene in American History X?

Is it as bad as it looked?

Thu, 05/29/2014 - 11:33 | 4805769 maskone909
maskone909's picture

now is about the time to consider a 3X leveraged inverse short bond ETF.... $TBT $TMV

Thu, 05/29/2014 - 11:39 | 4805781 CrashisOptimistic
CrashisOptimistic's picture

the whole inverse short thing is hard to grasp, as opposed to long.

If you think yields are going up, you are bullish on the US economy.  Period.  That's what sends yields up.  Vibrant growth.

All that being said, note that if it were not an election year there would be reason to fear a yield runup.  Stimulus could come out of nowhere.

But not this year.  Congress is locked into a Sequester budget that extends to March.

Thu, 05/29/2014 - 11:45 | 4805799 maskone909
maskone909's picture

the lower yields go, the more likely they have to up.... eventually.  last time the 10y yields jumped made an easy 100% in a few months.  mind you the fed can just buy all the shit in a worse case scenario which is almost what they are doing now.  but if the 10's went to say 3.5% thats an easy swing

Thu, 05/29/2014 - 11:52 | 4805825 CrashisOptimistic
CrashisOptimistic's picture

Last year's jump was from Hilsenrath introducing the word "taper" in April.

Otherwise, yields have been falling relentlessly for 30 years.

For yields to rise this year, you pretty much HAVE to have resolution of Libya's shut in oil.

Thu, 05/29/2014 - 11:55 | 4805839 Flakmeister
Flakmeister's picture

And given that Libya is going tribal.... that ain't gonna happen...

Thu, 05/29/2014 - 12:20 | 4805933 madbraz
madbraz's picture

Last year was an outlier, the largest price swing in treasuries in the last 30 years - it was orchestrated, manipulated and we are simply reversing that manipulation.  hilsenrath and the dropbox media are just vehicles for this.

 

there is a shortage of treasuries for collateral (thanks FED), that's why you see the NY FED reverse repoing $200 billion a day.  this fact is as plain as day, yet hedge funds and probably the big primary dealers keep betting the other way - which is the dumbest thing a banker could do.

 

the long end is derived from expected economic growth, so there is a clear ceiling to where it can go.  the floor for long term rates is dependent (among other things) on the amount of collateral available and if shit hits the fan or not in risk markets.  it is not impossible to see negative interest rates even on the long end, at least from a supply/demand treasury perspective.

 

 

Thu, 05/29/2014 - 12:50 | 4806066 viahj
viahj's picture

the world has gone full retard to still consider US debt to be "collateral".  paper "assets" consisting of promises of future payments from a broke government who monetizes their own debt, err I mean your collateral, while having to peg rates at ZIRP just to make interest payments.  LMFAO
It's a MA MA MA MAD MAAAD MMMAAAAAADDDDDD  WORLD! 

Thu, 05/29/2014 - 11:32 | 4805767 Kaiser Sousa
Kaiser Sousa's picture

full metal ponzi....

"Only the most obstinate academics and permabulls won't admit that the capital markets are rigged and that prices, particularly bonds, are artificial. Unless you are forced to play, most people will avoid the bond and stock markets because prices are rigged.

As bonds and stocks inflate, even traders are withdrawing from the markets because, as we keep warning, stocks could blow out to the upside in a euphoric rush or they could crater as intervention wanes and/or reality is introduced.

The stock market activity over the past two months should alarm any rational trader or investor. Several times over the past two months major stock indices suffered frightening technical damage but were quickly rescued by determined buying.

Unlike as in past years, the frequency of breakdowns and breakouts increased greatly over the past two months. This is a crystal-clear sign that the stock market is in an abnormal state.

Bonds, of course, are the in the mother of bubbles, a rigged market by desperate sovereigns and central banks that are joined at the hip in the quest to keep the modern welfare state and crony capitalism afloat..."

http://www.gata.org/node/14044

Thu, 05/29/2014 - 11:40 | 4805780 youngman
youngman's picture

All this going on with the bond market..and Gold and silver going down...all rubber bands are at the breaking point now..which one will break first...stocks tank... bonds fall..or PMs go up...we are close to one of these events..I am in the camp of PMs going up....they seem to be the last in the game right now..and when all the sheeple see that they are behind the game..they wil all jump in to ride the pony...and up it should go to new highs just like the rest of the makets

Thu, 05/29/2014 - 11:42 | 4805789 CrashisOptimistic
CrashisOptimistic's picture

The people with money are the elders who are the last generation to get a pension.  THEY have the money.

And THEY ain't ever going to buy gold.  If you are 75 years old, you buy bonds when you're scared.  Not gold.

Thu, 05/29/2014 - 11:40 | 4805786 Spungo
Spungo's picture

Fingerbang bang bang bang bang.
I'm gunna fingerbang, bang you into my life.
Girl, you like to fingerbang and it's alright.

Thu, 05/29/2014 - 11:55 | 4805837 disabledvet
disabledvet's picture

We can claim "bubble" or even more terrifyingly "plunging yields mean something."

For those that put on the Big Short last year when Ben Bernanke saw the price explosion coming and suddenly out of nowhere announced "The End" (of extraordinary measures) this year is truly (duly?) a long, slow, painful death.

Whatever the reason someone or something is racking up some truly staggering losses here and Mr Bond is indeed saying "you're not good for it."

That would be losses in any number of assets...gold, real estate, "trading strategy bezerkamunga"...who knows.

Thu, 05/29/2014 - 12:07 | 4805881 financialrealist
financialrealist's picture

This is creating a pension nightmare.  good luck with all those promised benefits. The FED will save the day with direct US equity purchases...at least that way they can control one side of the equation, wait, they control both sides...Im confused...screw it, we'll just debase our way out...all is good.

Thu, 05/29/2014 - 12:44 | 4806049 GFORCE
GFORCE's picture

Markets are likely focused on the June 5 meeting of the ECB. As the FED tapers, markets see ECB picking up the slack and will (as always) bid up the rumour and expectation, whilst selling the facts, when it is less than expected.

Markets don't really follow fundamentals right now. Because they don't have to. Write to your central bank.

The likelihood is that the majority bitching on here have zero skin in the game and are armchair economists seeking a market crash to satisfy their own ego. What a lonely game. 

Thu, 05/29/2014 - 14:11 | 4806532 cathrynm
cathrynm's picture

"Why are they buying Treasuries? because they offer great yield pick up - unbelievably..."

I should check, are the CNBC guys still repeating the 'and when interest rates go back up' mantra?

Thu, 05/29/2014 - 14:11 | 4806533 cathrynm
cathrynm's picture

"Why are they buying Treasuries? because they offer great yield pick up - unbelievably..."

I should check, are the CNBC guys still repeating the 'and when interest rates go back up' mantra?

Thu, 05/29/2014 - 14:12 | 4806541 cathrynm
cathrynm's picture

"Why are they buying Treasuries? because they offer great yield pick up - unbelievably..."

I should check, are the CNBC guys still repeating the 'and when interest rates go back up' mantra?

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