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Why Treasury Yields Have Further To Fall (In 1 Simple Chart)
Despite the powerful rally over the last several weeks that brought the US equity markets back to their all-time highs, treasury yields are up only slightly and are well below mid-September levels. Meanwhile, as Gavekal Capital notes, speculators are still carrying a hefty short position in 10-year treasury futures and options contracts, implying that yields have further to fall yet.
Speculators are currently short about 160,000 contracts. Over the last several years, significant lows in yields have not been achieved until speculators became net long about 100,000 contracts, implying a 260,000 long contract delta that would need to be filled to achieve a low in yields.
Simply put, if history is a guide we are going to have to observe a massive change in positioning before yields make a low.
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Maybe so, but the risk/reward is still awful.
Picking up nickels in front of the steam roller.
Who is on the other side of those trades? Does 'non-commercial' = 'smart money'?
Same reason we will have a dip to $13 on XAG - $1019 XAU (poss over run sub 1000) and Brent thru $78.
That becomes key stacking upramp for me.
carter and clinton were the most fiscally prudent presidents. owebomba, reagan, and the bushes were/are the worst.
Congress pays the bills.
Not a new thought here, but something needing to ponder about the current state of things:
"The more the DC US borrows, the lower rates go."
An American, not US subject.
"Yes Mr. Bankster, I have doubled my debt load in the past few years. But that should qualify me for lower rates. Right?!"
Certainly, as long as
I'm buying T-notes, again.....and will sell them when the 10y falls below 2.0%, again.
Based on supply shortage alone, yields could go sub 1% much earlier than expected. Mid October was no fluke.
They're there now.
Yields will remain at THIS "low" for decades - or until the crack-up boom - whichever comes first.
It was Knuckles who wrote eons ago through an "elegant" (lol) and logical pice that PMs and bonds were the way to go......a bit early, but, he wasn't wrong.
Shit...I forgot my para-shute
Come on people....ZH peeps should already know...We fall when they are safe in their bunkers
Help
Why does nikkei go up when JPY goes into tank mode?
Dollar up Stocks up?
Nikkei companies get less for goods, right....They will earn less just due to exchange, right?
Or is it because Jap Central Bank has allowed purchase of stocks to increase by pension fund?
Is this Jap QE ongoing, like our Fed was? Or a set amount?
Global float towards concentration in the US Try markets as Govt securities in other nations are not stores of value. US real economy is not the singular determinant of US Try.
It is US$ Try (short term) that are repository of the global float. Major holders of US Try are not yield chasers. Just watch global fund flows and not retarded theories.
In addition to manipulation by the government-financial complex other forces are converging to further distort and disconnect Wall Street from the American economy. Why American equities continue to rise is very important, more is at force here than the usual causes which might include a pre-election and post-election rally. This is more than the continuation of a double down and let it ride mentality that has been ratcheting the market higher while reenforced by media hype.
Most analysts agree that money from countries with weakening currencies is flowing out of the troubled areas and the U.S. is receiving most of the benefit. The Japanese as well as many Chinese and Europeans know with so much money floating around and few safe harbors America is becoming the most comfortable option for temporary investing their money. More on why this should be viewed as a sign of instability rather than a reason to celebrate in the article below.
http://brucewilds.blogspot.com/2014/11/why-american-equities-are-rising.html