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Treasury Bulls Beware: A Cautionary Tale From Punk'd British Bond Traders

Tyler Durden's picture




 

Bad data, don't worry, the central bank's got your back; Good data, don't worry, the central bank promised to stay easier for longer and longer (no matter how good things appear from the data). That's the meme that has driven the short-end of the world's largest bond markets to record lows. And then, just as the world's bond traders think they have the central banks understood, the Bank of England drops a tape-bomb...

 

Just when you thought you knew your uber-dovish central bank, this happens:

BoE Governor Carney noted that borrowing costs may rise sooner than economists expected...

 

and Deputy Governor Bean added...

 

"An increase in interest rates will be a symbolic step, because it will be an indication that we are on the road back to normality,"

 

"I would welcome us getting on to the path of normalization, as a demonstration that the economy is healing,"

 

Which produced this... in 1Y Gilts...

 

Coming to a US Treasury market near you soon? We have argued before that the Fed needs volatility to maintain their omnipotence.

 

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Mon, 06/16/2014 - 14:18 | 4861992 buzzsaw99
buzzsaw99's picture

bullshit bullshit bullshit

symbolic = inconsequential

Mon, 06/16/2014 - 14:33 | 4862065 Sudden Debt
Sudden Debt's picture

Actually, the rich are richer than in 2008.... Fuck the rest like in 2008....

Everything is indeed normal again.

Mon, 06/16/2014 - 14:58 | 4862179 Stoploss
Stoploss's picture

ALL BULLSHIT..........  LOL!!!

Mon, 06/16/2014 - 14:53 | 4862149 AccreditedEYE
AccreditedEYE's picture

Exactly. They play at wanting Vol and not wanting bubbles. What they practice is something entirely different. Every pop higher in Vol + Yields gets hammered down... if you are considering getting long either one don't fool yourself into thinking otherwise.

Mon, 06/16/2014 - 15:19 | 4862284 SAT 800
SAT 800's picture

Shorted t he British Pound Today; BIG TIME. December contract @ 1.6940; Whoohaa! free money for Christmas.

Mon, 06/16/2014 - 14:20 | 4862001 buzzsaw99
buzzsaw99's picture

The immaterial has become immaterial. [/Lord Beckett]

Mon, 06/16/2014 - 14:22 | 4862015 Spitzer
Spitzer's picture

Behavioral economics at its worst.

Mon, 06/16/2014 - 14:37 | 4862079 LawsofPhysics
LawsofPhysics's picture

perhaps, only one thing is certain now, central banks are the "bond market" now.  They wil make the "market" do what is good for them, period.

Mon, 06/16/2014 - 14:23 | 4862016 madbraz
madbraz's picture

Is zerohedge becoming a dropbox for primary dealers and the Fed, much like some other blogs like Calculated Risk?  I mean, what's up with the non-stop treasury bashing/warning messages?

 

That Carney is a mouthpiece and tool working for the banks we all know, but that zerohedge joins the ranks with this dumb talk would be unfortunate.

Mon, 06/16/2014 - 14:25 | 4862023 Millivanilli
Millivanilli's picture

National debt clock...

http://www.usdebtclock.org/

Is Belgium or Japan our savior?

 

Mon, 06/16/2014 - 14:44 | 4862110 mt paul
mt paul's picture

chocolate covered sushi....

Mon, 06/16/2014 - 14:44 | 4862114 N2OJoe
N2OJoe's picture

So you're thinking the U.S. will be able to legitimately pay off it's $16 TRILLION debt???

Mon, 06/16/2014 - 15:18 | 4862278 SAT 800
SAT 800's picture

What could go wrong ?

Mon, 06/16/2014 - 14:58 | 4862168 CrashisOptimistic
CrashisOptimistic's picture

Tyler hasn't seemed particularly pro rate increase.  He has seemed anti GDP increase and that leads to rate decrease.

It is useful to remind ZH commenters that there was essentially a consensus that "the Fed will never taper", it's all bullshit talk from Hilsenrath.

Proved not to be so.  The Fed has tapered, regardless of GDP or anything else, all while claiming it is data dependent.

Maybe it's not data dependent.  Maybe they have to taper for other reasons.

The Fed Governor speeches about expecting to raise rates all derive from their internal models, and you know God Damned well those models presume $85 oil.

Mon, 06/16/2014 - 15:23 | 4862303 Amish Hacker
Amish Hacker's picture

"Other reasons" to taper might include the need for those bonds elsewhere. Whatever bonds the Fed doesn't buy become available as AAA collateral to help support the global shit pile of derivatives.

Mon, 06/16/2014 - 14:23 | 4862017 Dr. Engali
Dr. Engali's picture

There will be no normalization of rates in my lifetime.

~ The Bernank

Mon, 06/16/2014 - 14:30 | 4862049 ParkAveFlasher
ParkAveFlasher's picture

Maybe he is overestimating his lifetime.

Mon, 06/16/2014 - 14:41 | 4862098 NoDebt
NoDebt's picture

We can only hope.

Mon, 06/16/2014 - 14:41 | 4862099 Everybodys All ...
Everybodys All American's picture

We can only hope.

Mon, 06/16/2014 - 15:45 | 4862421 Colonel Klink
Colonel Klink's picture

A sentiment worth repeating.

Mon, 06/16/2014 - 14:39 | 4862085 Boston
Boston's picture

Yup. For rates to soar, the Japan scenario must be ruled out. And I see nothing but echoes of Japan in the US.

Mon, 06/16/2014 - 14:45 | 4862115 Dr. Engali
Dr. Engali's picture

We are both on the same page, unless they do something stupid (even dumber than what they are currently doing) and blow everything up.

Mon, 06/16/2014 - 15:13 | 4862250 fonzannoon
fonzannoon's picture

Put me down for them doing something stupid and raising rates. 

Mon, 06/16/2014 - 15:42 | 4862401 Boston
Boston's picture

....unless they do something stupit (even dumber that what they are currently doing) and blow everything up."

Yes, and if that happens, owning pm's will offer you some protection.

 

Mon, 06/16/2014 - 14:24 | 4862018 Flakmeister
Flakmeister's picture

Funny considering the only "asset" that the BOE has on their balance sheet that can be converted in oil and NG imports is USTs....

Mon, 06/16/2014 - 14:25 | 4862022 orangegeek
orangegeek's picture

Rates go up?  Fugly gets real.

 

 

Mon, 06/16/2014 - 14:27 | 4862028 FranSix
FranSix's picture

Yield curve inversion?

Mon, 06/16/2014 - 14:30 | 4862046 Unknown Poster
Unknown Poster's picture

If there was anything happening in the economy, the would raise rates. Nothing is going on, so they will raise rates to make it appear there is activity. This will crash and burn.

Mon, 06/16/2014 - 14:30 | 4862047 RaceToTheBottom
RaceToTheBottom's picture

Maybe the FED should spend less time figuring ways to manipulate the market into acting the way a free market would act and just get out of the way and let the free market act?

Mon, 06/16/2014 - 14:31 | 4862056 buzzsaw99
buzzsaw99's picture

the free market is a myth, like bigfoot

Mon, 06/16/2014 - 14:40 | 4862089 Postal
Postal's picture

Not exactly: Someone has reportedly spotted bigfoot.

Mon, 06/16/2014 - 14:52 | 4862145 Colonel Klink
Colonel Klink's picture

Which must be Flackmeister, it also explains his Bigmouth.

Mon, 06/16/2014 - 15:26 | 4862322 SAT 800
SAT 800's picture

Ser Gut, mein Oberst !

Mon, 06/16/2014 - 15:44 | 4862414 Colonel Klink
Colonel Klink's picture

Thanks I'm just having a little fun as his expense.  I love him like I love our benevolent Central bankers.

Mon, 06/16/2014 - 15:57 | 4862477 Bemused Observer
Bemused Observer's picture

I too, welcome our new banker overlords...*shifty-eyes*...really, I do, ask anyone...

Mon, 06/16/2014 - 14:34 | 4862069 youngman
youngman's picture

The Fed will normalize the rates after they own them all....then they can just print to cover the losses....and everyone else will be playing the options markets...for the volitility....just playing the new game

Mon, 06/16/2014 - 14:40 | 4862082 ebworthen
ebworthen's picture

"Return to normality"? 

That must mean raising rates to pop the 2009-2014 bubble they blew.

Then clearing all the savings/retirement chips off the table of the little people, bailouts of banks/corporations/insurers, and then another ramp job bubble fest.

Yup, central banks need volatility because their bankster masters need bubbles to steal from the treasury and the citizenry.

There is no such thing as investment anymore, only parasitism.

Mon, 06/16/2014 - 14:41 | 4862101 bbq on whitehou...
bbq on whitehouse lawn's picture

Interest rate derivitive. Boom.

Mon, 06/16/2014 - 14:56 | 4862169 shovelhead
shovelhead's picture

Ok Rover...

Stop playing dead...Rowf

Good boy.

Mon, 06/16/2014 - 15:28 | 4862330 SAT 800
SAT 800's picture

Already short the US Long Bond, as reported here on 05/12; underwater but serenely confident; at least as long as the Hillbilly Heroin holds out.

Mon, 06/16/2014 - 15:40 | 4862389 Atomizer
Atomizer's picture

Public Image Ltd - Fat Chance Hotel

 

Thought it was suiting. :)

Mon, 06/16/2014 - 15:48 | 4862437 css1971
css1971's picture

Ooooh I know I know the next headline!!!!!!

British Housing Bubble goes Boom!

Mon, 06/16/2014 - 17:09 | 4862755 assistedliving
assistedliving's picture

when ur printing 27 trillion, whats a bip or two?

Wed, 06/18/2014 - 13:24 | 4870058 lasvegaspersona
lasvegaspersona's picture

The secret message is 'buy gold'. Look, if it goes lower the little people will suck up the last of the available physical on the planet. If it goes higher it will do so in a commodity bul market which will kill the ecomony. Gold is range bound. That makes it the one stable savings vehicle. I like it.

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