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Chart Of The Day: The Impossible Is Possible Edition
Swiss interest rates were already the lowest in the world before The Swiss National Bank de-pegged from the Euro last week but in the ensuing few days, investor demand for the 'safety' of Switzerland has collapsed the yield curve to levels thought impossible just weeks ago...
The Swiss yield curve is now negative to 14 year maturity - the longest in the world...
With 1Y Swiss rates trading at -1.11% today - the lowest in the world...
Does this look like 'the crisis has passed'?
Coming to a US Treasury curve near you soon...
Charts: Bloomberg
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Do you feel lucky punk? Make my day...
http://hedgeaccordingly.com/2015/01/economists-call-for-cancellation-of-...
We're gonna need a bigger ZIRP.
No amount of ZIRP is going to help. Only make things worse in the short and long term. Basically, the chicks have come home to roost. Time to pay the pied piper.
Gold and silver are your friends, your only friends. Aside from Bullets, beans and bandaids.
There is nothing stable about a flat yield curve.
nirp can go a lot lower, as far as we're concerned
we buy the bonds, use them as collateral, borrow 10x their value
we pay ourselves bonuses with the borrowed money
our enterprise holds bonds with ever-decreasing value -- so what
the enterprise declares bankruptcy and we send out a letter of apology
nirp? big deal.
hugs,
the ken lay foundation
*Cash, †Bonds, Gold...
*NOTE: "Cash" does include Swiss Francs held in my greasy, little, sausage-like fingers.
†NOTE: "Bonds" does not include NIRP Swiss paper...
When all you have is a hammer, the whole world looks like a nail... Prepare for the hammering to continue.
i agree with you, but what do you think it finally take the final asset class to get it...equities?
Whilel you are on the 'b's, don't forget the broads and booze...
we're gonna need a bigger nirp
As a kid, I always hated purple nirpples.
so buy stocks then? i'm just a little sheep in a meadow...please explain...this means buy stocks right. just keep buying stocks at all costs?
Yes. You stay there and keep doing that. We'll be right back.
Just need more fishy NFLX-style accounting and the world is saved from ruin
GOP's Spanish and English State of the Union responses differ on illegal immigration, Cuba:
http://tinyurl.com/phxv2o3
50 years... is that the longest term? Consols here we come.....
Problem is UBS has introduced a 140 BP spread on 10 year mortgages. Other banks will follow.
Lombard is introducing negative rates for assets north of 100K. Other banks will follow.
If you have 10mm in mortgages try the derivative SWAP appoach. There you pay 0.0% on a 10 year mortgage.
Money for nothing and the chicks for ....
Everyone thought it impossible than the Central Banksters could ever lose control. Now they are desperately trying to stave off armageddon.
Trying and disorting the hell out of everything in the process. Demograpics are destiny but you NEVER hear any questions in the post meeting Q&A about that. The Fed, the media and pretty much everyone else but a few people and sites pay any attention to the thing that drives it all which is how many people there are and where they are in their life cycle. In the end central banks cannot do anything about babies and so they will fail, especially as by facilitating the absurd explosion of debt they will have made things much much worse than they would have been if politicians had been forced to make some real decisions instead of applying truckloads of lipstick to the very giant pig.
For the curious google biderman blog and read some of chris hamiltons articles about it. There are other good sources as well.
Well obviously the answer is to increase taxes, especially on corporations. The fact that the consumer ultimately pays those taxes is irrelevant and also the fact that our corporations must compete with foreign corporations who in most cases pay greatly reduced taxes if any at all surely could have no effect on off-shoring jobs.
Increasing the medicare and social security caps and percentages on high income earners is another path to economic justice even if it still doesn't balance the books. Who cares, right?
I'm fucking sick and tired of constant bitching about this mess somehow being caused because of inadequate taxation. They can take their entitlements and taxes and shove them up their ass.
Considering what the CB's are doing i could quote the entire movie 'Airplane" for the high quality snark value but... https://www.youtube.com/watch?x-yt-ts=1421782837&x-yt-cl=84359240&featur...
There's no problem so big that a printing press cant cure it
There's no problem so big that a printing press cant cure it
N o w all those Poles can get a CHF mortgage for 0.6%.
Can NIRP go to -110% ……… I would like to make long range plans
It can get worse than that.
Yes, after they have taken all of your FRNs, they can then start taking out debt in your name and putting you on the hook for it... OH SHIT!
Define long range.....
NIRP-pee-dee-doo-dah, NIRP-pee-dee day ... my oh my what a wonderful 52-week low!
"Coming to a US Treasury curve near you soon..."
If you have to ask .......
Just wait until the equity markets start pulling back. All that cash will rotate into PM's and the bond market.
Lots of crickets in the Q-4 earnings numbers...
if i could have a dime for every earnings statement that included:
"negative impact of currency ...... "
Good point regarding the rotation into bonds. It will be very interesting to see to which levels bond yields will go from here in the case of a big sell-off in stocks.
If you don't believe in a US decoupling, the long bond is the place to be in the next months.
And another point: Given all the deflation that Japan and China export you can make the point that e.g. Bund yields at 0.5% are not expensive. I have recently seen a fair value model for Bunds with a good track record that assesses the current fair value at 0.3%. Scary stuff.
explain why a negative rate bond is preferable to cash, if both are fiat only backed by the full faith of our governments? Is the bet that cash will devalue faster than bonds, when bonds are still pegged to their issuing currency? How is that even possible? The bonds return less in numerical currency that they were bought with, AND that currency is devalued as well?
I hear what you are saying and it has been on my mind lately. If I have $1M in cash at home the authorities will might decide to confiscate it, although I just read that the DOJ may be rethinking that sort of thing. If I spread it around to 4 or 5 banks it might get Cyprus'd.
A bond earning -1.11% percent will be quite valuable when new issues are paying -2.5%
Any responsible currency management will get punished in the world of competitive managed economies. I just read the Canadians cut their rate today. The Loonie is dropping.
"Race to the bottom." is a cliche' with real meaning.
a few years ago ... before he went behind the paywall ... david rosenberg was bullish the loonie
dope
BULLISH!
They need to de-NIRP first, re-ZIRP, and PIRP.
Imports into the USA could get REALLY cheap here.
We've had a buyers strike going on many years now. Not good to be a legacy asset in my view save for the folks selling into the war effort.
Debt is still dirt cheap...if you're the issuer.
"Criminally low interest rates."
ECB wants to force Swiss to their knees with a nasty deflation...then offer it a non-deflationary way out: the eurocurrency.
ECB needs a credit like Switzerland to hedge against a potential "out" vote in the 2017 UK referendum.
ECB wants a counterweight to Germany's hegemon status...someone with more clout than France to "take on" Germany during EU policy making.
hahaha...its the end of the world as we know it..
monty python did a sketch that involved the statement "used to pay the mill owner sixpence a week for the privilege of working"
beyond absurd..
makes a mockery of all models using government bonds, even more so if you model real returns on government bonds instead of the zero or negative yields.
in fact i am reminded that there is one sure way to blow up a money weighted rate of return calculation (and yield) and that is to introduce will positive and negative cash flows...
qe does that, and as for negative bond return forecasts, even on a buy and hold basis? a model just says "zero bound exposure".
why anyone would not just hold currency (bank notes) rather than pay someone for the privilege of lending them money is beyond me.. not practical? 100 million one year costs 800,000 to invest v costs of getting out the wheelbarrow?
(woops, not scaremongering at all, but this is the equivalent of wheelbarrow monetary policy - wilful debasement of the banking system).
Remember the stories we read in school, in the 50s and 60s?
About people in the 1930s stuffing their money in their mattresses instead of putting it in the bank?
We though that was kind of silly, strange and funny.
Well...we're not laughing anymore.
Well if the Swiss Franc has the potential to appreiciate more than what the cost is to hold it, why wouldn't someone take that risk.
The question is why are they also piling into the dollar, which only has the real potential to depreiciate?
Like a Swiss pension fund? Riiiight. The Swiss pension system is SO F@cked now...
No. Think of a US Pension fund instead....
It would be pretty funny to look at the price of a Swiss Zero Coupon bond.
Price at 110 to get back 100 in 10 years?
what's the 5y 5y forward? or 10y...or 1's x 3's etc
But what if the purchasing power of those 100 Swiss Francs can buy 1.5 times the amount of American goods it could have bought with 110 francs today?
Was it a good deal then?
Now that is a cliff dive to 1 year safety in order to hide from the bail in/ devaluation express
cliff dive -plus one!
The global fiat ponzi has gotten a big blow to it's foundation. Things will get wobblier and wobblier as we proceed from here. Act and hedge accordringly. Good luck to all, we'll all need it quite soon, me reckons.
Crazy so as a Swiss I should take up a mortgage and get paid for it as a thanks because investors believe that when all hell breaks lose we'll be happily selling watches and Cheese to the world which will be starving by the time and with the money we make we'll pay back our debts. Is that it? The Euro depreciated from 1.02 to 1:1 in the last two days despite the yield rate curving further down, when will this end? :(
With those ideas you really should write a book.
Call it "Alice's Further Adventures in Switzerland".
Negative...it is really more imaginary. Bet they'll introduce 'i' in their numbers soon.
Bread and Circus.
Fun with CB numbers.
That should fit just perfectly with all of those "virtual" dollars.
the central banks need the brilliance & integrity of Jon Corzine to patriotically help us all out .....Jon, what do you advise?
No. No ...... of course you cannot leverage your clients' accounts ....we all might be prosecuted. Not to worry you say, only your CFO knows so there are no 'witnesses"?