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Treasury Curve Roundtrips To Flattest Since S&P's "666" Intraday Lows
Submitted by Gavekal Capital blog,
You all remember March 6th, 2009, right? Some days are easier to remember than others and March 6th, 2009 will not easily be forgotten as that was the day when the S&P 500 made its now infamous "666" intraday low and it also marked the closing price low of 683 for the S&P 500 during the financial crisis. Seems like a very long-time ago as the S&P 500 is roughly 1300 points higher than the intraday financial crisis low.
Interestingly, as of the close yesterday, the spread between the 10-year treasury and the 30-year treasury fell to its lowest level (69 bps) since that infamous day.
Since April 2013, the long-end of the yield curve has steadily fallen by 55 basis points.
It is not just the long-end of the yield curve that has narrowed. Inflation expectations implied by both 10-year and 30-year TIPS have fallen substantially since the beginning of August.
Breakeven inflation implied by 30-year TIPS has fallen by 25 basis points and breakeven inflation implied by 10-year TIPS has fallen by 34 basis points.
The spread between 10-year and 30-year TIPS has also narrowed by 25 basis points since August 13th.
If the dollar continues to strengthen, it seems reasonable to expect the spread between 10-year and 30-year TIPS has further to fall.
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So what do bonds "know"?
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This is good right?
Silver is on firesale. The printers are getting primed!!
I backed it up today when I saw several dealers being grayed out on their inventory.
OT - Struck up a conversation with a county sheriff at the gas pump today. You would NOT believe the well of info he gave me. HE brought up SandyHoax & said it was crap to check the FBI website for homicides in Newtown. Also said he was considering quitting as he's a constitutionalist & see's just where we're headed, militarization, etc. etc. All the stuff discussed here. By first impression considering looks, you'd have thought he was nothing more than a psychopathic roid head. He wasn't. Once again, goes to show ya many of us overgeneralize & lump people into groups. Wish he was my neighbor!
THEY KNOW NOTHING!
If I'm being forced to raise dollars how can I then turn around and buy debt? If I'm from Japan, Russia, China, Europe, etc I need to raise capital...equities, okay I guess. Far better is an actual asset that "denominates" dollars. First thing that comes to my mind is a single family home that generates electricity. When combined with a battery powered car I'm an instant energy trader "with the patsy being a state that overcharges for the juice and relies on energy traders to make up the difference.
So sure...yields totally collapsed in the USA circa 2011...but now you have huge carry combined with a collapse in trading volumes/products to trade in.
Still no recovery. "Nothing but debt" (and leverage) as far as the eye can see.
Large cap growth has been outstanding.
banksters no like flatness
so, yes
"So what do bonds "know"?"
DEFLATION
learn it
love it
.
.
"Nuff Said".....
S&P 666 was and is true valuation.
The Fed can never, ever let the market normalize. Keep printing and elevating until the US dollar blows.
The dollar already blows!
Yields in ten year German bunds denominated in worthless euros are at one percent.
If your duration risk is anything longer than ten years YOU ARE PHUCKED.
REIT's, MLP's...any type of "inflation trading" looks to me to be a couple trillion in lost leverage.
Trading energy futures? Bwhahahaha. The price is collapsing and you are in BACKWARDIZATION.
Electricity? Bwhahahaha.
Senator Palpatine maybe...
Nice, first case of ebola diagnosed in the U.S. We should probably just throw the borders wide open.
Scary. "That transmission mechanism isn't broken."
TIPs = full retard. Never go full retard.