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US Yield Curve Collapses To 6.5 Year Lows
As yields across the Treasury complex continue to rise this week - amid desks complaining of no liquidity at all (and following yesterday's weak auction) - the yield curve (5s30s) has collapsed to 108bps, its flattest since June 2008. 2s30s continues to slide also (at 212bps) almost eerily perfectly tracking the plunge in the curve of the early 2000s...
5s30s hits flattest since June 2008...
As 2s30s tracks eerily close to the mid 2000s cycle...
tick-for-tick and level-for-level... we are sure this will end well!
Charts: Bloomberg
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Nothing to see here...just move along....
On the contrary, it shows that "somebody" is selling long term treasuries for short term bonds, forcing the FED to mop-up the mess. I wonder who that "someone" could be...
Most everybody appears to want the place right next to the emergency exit.
tick tock
Indeed. Since interest is crap anyway, better hold something that actually has a chance of paying the coupon... By the way, I wonder how those 100 years gilts are doing right about now...
Perpetuals ?
Bad ideas always come back.SDRM bonds are the new perpetuals.
Who in his right mind would buy SDRM bonds, except some insane central bank ?
At the moment.Everyone else will get a choice,lose it or roll into them.
That seems to be the plan anyways.
3o year paper is a foolish thing to buy when you don't know how it will be paid off....
everyone knows how. more 30 year paper.
Banksters no like "flat"
therefore, i love "flat"
Btfd
Please stop posting things that suggest we have YEARS to wait before TSHTF
"We collapsed some folks.."
Oh my!!!
Who saw this one coming?!!!
So we got three more years of "good" times?
Can't wait for Janet to say: 'we really don't need anymore bonds for now'. That would be the day that there was no 'tock' after the 'tick'.
So much paper, so few real things. The illusion is revealed, the magician is just another guy in a tux holding a black stick and pretending it is a wand. Like the audience at a Penn and Teller show, we want to believe. We will continue to pretend to believe until we can't.
We have tossed our savings to the money managers for years and we trusted their judgment as to how they 'invested'. Now we are learning that they ran out of good investments decades ago. It has only been the fact that we all allowed paper to pretend to capture the sum of our productive efforts that this has worked. The paper however depends upon the ability of the debtor to fulfill the promise to produce. This has now become impossible planet wide. At 200 trillion in promises, the US government will be the biggest disappointment.
Get what you need now while the illusion persists. The magician has been drinking and the show will be cancelled.
Yet one more data point suggesting 2-3 years left.
Things are sure to be interesting in 2015-2016, but I think the reality is the show really gets moving in the late 2016 through 2018 time frame. It'd be nice if it was sooner but we have to play the cards we're dealt.
can't draw that parallel
from 2004 - 2006 FOMC steadily increased interest rates (425 bps iirc) which produced the squishness
with ZIRP for now and till the cows come home?
Better 2-3 years early than a day late.Luck can work both ways, and good luck usually only
comes with the hard work that puts you in the right place to use it,outside winning the lotto of course,
A lot of pieces just not fitting in the puzzle in front of us.
Keeping sane in a time of universal madness is hard.
So for dumbasses like me here, please spell this out in plain engrish so I can talk somewhat edumacated to others.
I think it means banks are going in the toilet again...
Back in the good old days --
Banks borrow short term - deposits, savings accounts, short term CD's
Then loan the money out at longer terms.
Interest rates are (relatively) lower for short term borrowings / higher for the longer term loans.
Banks made most of their profits from this interest rate spread.
I am not sure this matters as much now as it did in 1980 -
Also inversion of the yield curve - short term rates higher than long term rates is a sign of a recession.