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Are The Bond Vigilantes Back? Treasury Yields All Higher Year-To-Date For The First Time

Tyler Durden's picture




 

5Y Treasury yields have swung 16bps from the immediate post-payrolls reaction trough. Across the entire curve yields are exploding higher and for the first time in 2015, all yields are now higher since the start of the year... 30Y yields are still 24bps lower post-QE3 but 2Y yields are 24bps higher.

 

All yields now higher year-to-date...

 

as they explode today...

 

They're back!!

 

Charts: Bloomberg

 

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Fri, 03/06/2015 - 11:33 | 5861330 madbraz
madbraz's picture

portugal 30 year bonds are now yielding less than our 30 year bond.  makes perfect sense, a country with a borderline junk rating.

Fri, 03/06/2015 - 11:43 | 5861361 Boston
Boston's picture

Let's not forget the Italian and Spanish government bonds. The Italian 10yr is at ~1.28% (and falling today) and the Spanish 10yr is at ~1.26% (also falling in yield).

While the US 10yr offers a ~2.23% yield.

Now if THAT doesn't make sense, then nothing does........right!?

Btw---I'm buying the US paper and I wouldn't touch the Spanish/Italian paper with a 10 foot pole. Sooner or later, my long position will work out just fine, just as it has----on numerous occasions---over the last 18 months.

Fri, 03/06/2015 - 11:45 | 5861380 Dr. Engali
Dr. Engali's picture

I'm with you. Any rally on yields is to be bought. The ten year will eventually work it's way down below 1%.

Fri, 03/06/2015 - 11:51 | 5861396 HardlyZero
HardlyZero's picture

Hey guys...

My junk is better than your junk.

Dirty dirty Business.

Easing...slouching towards zero.

Fri, 03/06/2015 - 12:35 | 5861590 Beatscape
Beatscape's picture

I'm on the same ship with you guys.  I've been preaching this strategy to my friends for the past ~3 years.  And, putting my $$ where my mouth is.  So far, it's been working out quite well.  Today's knee jerk reaction to the employment report is no surprise.  But the out of kilter relationship with Eurozone bonds cannot be ignored and I expect US Treasuries to resume their rally sometime next week. 

Fri, 03/06/2015 - 13:50 | 5861913 Pool Shark
Pool Shark's picture

 

 

What has worked for stocks, will continue to work for bonds:

BTFD!!!!!!!!

 

 

Fri, 03/06/2015 - 11:45 | 5861381 kaiserhoff
kaiserhoff's picture

Yup.  One morning does not restore sanity to the nut house.

Fri, 03/06/2015 - 12:08 | 5861474 NoDebt
NoDebt's picture

Not only are Spanish/Italian/Porugese bond yields falling, the value of the Euro is as well.  Why would they not be buying USTs that have a higher yield AND have currency appreciation tailwind from the rising dollar?

Answer: It's not "investors" buying them.

Fri, 03/06/2015 - 12:53 | 5861681 Beatscape
Beatscape's picture

Part of the selling pressure on US Treasuries in the past few months is the flurry of corporate bonds offerings and the hedge they put in place.  Many companies issuing new debt sell Treasury bonds as a hedge against interest rate swings and try to lock in a rate regardless of what the interest rate markets do. Today is a knee jerk reaction to the employment report. I see today's action as just a blip in the big picture. US Treasuries have some headwinds, but as long as the Eurozone bonds yeild significantly less than US Treasuries coupled with a weakening Euro currency, I'm holding my long positions.

Fri, 03/06/2015 - 13:35 | 5861791 KnuckleDragger-X
KnuckleDragger-X's picture

You just gotta get the herd moving in the right direction......

Fri, 03/06/2015 - 11:44 | 5861367 Ghordius
Ghordius's picture

would any rating agency ever be mad enough to give your country a different rating? portugal, as a reminder, did a lot of very painful reforms. did yours?

on more news-related terms, the national bank of Portugal is poised to monetize it's sovereign debt, while the private bank that manages monetary matters in your country is currently not doing it, for once

further, the dollar is getting stronger and stronger, while the EUR is getting weaker and weaker. And Greenspan is busy explaining that the EUR is "a failed experiment, can't work"

anyway: what are "Bond Vigilantes"?    sounds unpatriotic, doesn't it?

Fri, 03/06/2015 - 11:48 | 5861390 Dr. Engali
Dr. Engali's picture

You don't actually believe yields have anything to do with fundermentals do you?

Fri, 03/06/2015 - 11:53 | 5861410 Ghordius
Ghordius's picture

in this environment? absolutely not. the investor's perspective, though, it's a completely different matter

Fri, 03/06/2015 - 12:14 | 5861499 Doubleguns
Doubleguns's picture

Folks have been front running Draghi's 60 billion monthly installment plan. They will sell thier bonds to him at a profit. After Draghi is done buying bonds in the EZ the rates will rise Sharply.

Fri, 03/06/2015 - 14:06 | 5861801 KnuckleDragger-X
KnuckleDragger-X's picture

Fundementals aren't cool and optics are everything. There is money to be made and it's just of setting your mark for a proper fleecing.

Fri, 03/06/2015 - 11:42 | 5861368 tarsubil
tarsubil's picture

A perfect demonstration of the fact that it has nothing to do with any kind of real market and everything to do with the whims of those with a printing press.

Fri, 03/06/2015 - 11:52 | 5861407 Nafets93
Nafets93's picture

Let's not forget that the US deserved a junk rating as well.

Fri, 03/06/2015 - 11:34 | 5861334 Rodders75
Rodders75's picture

What about the Chinese, Brazilians, Russians, Thais etc selling off their treasuries to stop their currencies plummeting?

Fri, 03/06/2015 - 11:34 | 5861336 stant
stant's picture

Not yet but very soon

Fri, 03/06/2015 - 11:36 | 5861341 Rainman
Rainman's picture

Looks like the price of debt poker is going up.

Speaking of debt, two days ago the CBO says the staturory debt limit will be reached in October. Today Jack Lew says it will actually be March 16 !

         http://headlines.ransquawk.com/headlines/us-treasury-secretary-lew-urges-the-us-congress-to-lift-the-debt-limit-as-soon-as-it-can-and-says-the-us-will-reach-its-statutory-debt-limit-on-the-16th-of-march-06-03-2015

Fri, 03/06/2015 - 11:53 | 5861412 HardlyZero
HardlyZero's picture

Ides of March...where have we seen that before ?

High Debt.

Slave wages/work on the rise.

Ahhh...Roman.

Fri, 03/06/2015 - 13:47 | 5861903 Bastiat
Bastiat's picture

It won't matter.  Nothing does.

Fri, 03/06/2015 - 11:36 | 5861342 farmboy
farmboy's picture

Unfortunately I am afraid this is the same kind of "confidence building" as in stocks but now to "prove" the economic upturn is for real and support the case for a minimal hike.

The US is the new Japan there is no shred of evidence for an economic upturn if you look at the uncooked numbers the past 6 years.

Fri, 03/06/2015 - 11:38 | 5861352 ukspreads
ukspreads's picture

And the DAX is the new DOW

Fri, 03/06/2015 - 11:39 | 5861354 Fiat agnostic
Fiat agnostic's picture

The sweet spot to sell treasuries for international investors is before values plummet and while the dollar is still strong - like NOW!

Fri, 03/06/2015 - 11:42 | 5861370 Dr. Engali
Dr. Engali's picture

When the ten year yields above 3% I'll believe the bond vigilantes are back. Until then it's just more noise as yields work their way down  to 1% .

Fri, 03/06/2015 - 12:19 | 5861517 Hohum
Hohum's picture

I concur.  So, bond vigilantes are dead.

Fri, 03/06/2015 - 11:43 | 5861372 Kaiser Sousa
Kaiser Sousa's picture

some lying ass mother fucker from S&P Dow was on trying to deny the fact that the reason why they r booting AT&T out of the DJIA and replacing with fucking APPLE is not because of eithers stock perfromance and current valuations, but because they want a balance of companies that reflects what the economy looks like????????

 

FUCK OFF.

Fri, 03/06/2015 - 11:56 | 5861424 rejected
rejected's picture

There may be other reasons....

Fri, 03/06/2015 - 12:03 | 5861447 Kaiser Sousa
Kaiser Sousa's picture

crickets...............................................................

Fri, 03/06/2015 - 11:45 | 5861376 Bell's 2 hearted
Bell's 2 hearted's picture

bond vigilantes?

 

please, is this a joke?

 

i've been in long bond for years ... not going anywhere till 10yr yield hits 1%

 

rising rates into spring home selling season?  "cratering" comes to mind

Fri, 03/06/2015 - 11:45 | 5861377 youngman
youngman's picture

But gold and silver down big today....who would have known...everyone but me I guess...the Bondies are just frontrunning the Fed....

Fri, 03/06/2015 - 12:03 | 5861445 Kaiser Sousa
Kaiser Sousa's picture

u sound as shocked as i am...

 

Fri, 03/06/2015 - 11:47 | 5861382 Philo Beddoe
Philo Beddoe's picture

Kaiser,

...because they want a balance of companies that reflects what the economy looks like???????? Hmmmm is there a ticker named SHIT?

Fri, 03/06/2015 - 11:46 | 5861384 tecno242
tecno242's picture

I have to ask, as I think others are pointing out.

Why would anyone be selling US bonds here when Spanish, Italian, and Portugese bonds are all trading at lower yields than the US.

If you owned Spanish, Italian or Portugese bonds, would you not immediately sell them and buy US paper at higher yields?

The whole global financial system is broken.

Fri, 03/06/2015 - 11:50 | 5861397 Ghordius
Ghordius's picture

if you owned such bonds while not calculating in EUR, because out of the eurozone... yes (broken is a relative thing, but yes, too)

the phenomenon is called repatriation (go back inshore). in short, that's what the national banks of the EuroSystem... want

see Japan, see their debt, see how little it wobbles. leaving too much debt in the hand of foreigners is... problematic

Fri, 03/06/2015 - 11:52 | 5861406 LawsofPhysics
LawsofPhysics's picture

Interesting, yes, and how have such isolationist policies worked out before?

Fri, 03/06/2015 - 11:57 | 5861428 Ghordius
Ghordius's picture

history is full of them. yes, repatriation makes debt mountains more solid. a fairly good example for that is Japan

simplified, foreigners holding your debt spells trouble. not long ago, China tried to accumulate Japanese debt. Tokyo was frantic

Fri, 03/06/2015 - 13:38 | 5861866 LawsofPhysics
LawsofPhysics's picture

So, global weimar and WWIII it is then?  Not very optimistic.

Fri, 03/06/2015 - 11:53 | 5861413 Philo Beddoe
Fri, 03/06/2015 - 11:51 | 5861401 LawsofPhysics
LawsofPhysics's picture

"If you owned Spanish, Italian or Portugese bonds, would you not immediately sell them and buy US paper at higher yields?"  --  tell me exactly who or what entity is holding those bonds and I could answer the question.  what if the central banks are holding them all, buying and selling to themselves...

As you said, " The whole global financial system is broken."...

tick tock....

Fri, 03/06/2015 - 11:55 | 5861420 disabledvet
disabledvet's picture

They're not. These markets are separate...so sure, you lard up on Euro debt only to be hammered by the falling euro.

Same goes for the dollar....why hold treasuries when the dollar is soaring?

I remain 100 percent long Treasuries however because these are short term plays in my view.

The Western Media is hyping a storyline that simply makes no sense.

Fri, 03/06/2015 - 11:48 | 5861392 disabledvet
disabledvet's picture

Apparently huge amounts a cheap heeoin are flooding into the West.

Maybe someone should say something...

Fri, 03/06/2015 - 11:53 | 5861414 mattgallis
mattgallis's picture

The bond market has almost entirely priced in a rate hike.

Can't wait for Yellen to disappoint!

Fri, 03/06/2015 - 11:58 | 5861433 aliki
aliki's picture

bond vigilanties wont be back until the first round of sovereigns default. unfortunately, thats what i believe to be the genesis of "zero hedge's" name. i agree with them. these guys ran a story about japan today operating i believe 43% of overall tax revenues to servicing interest on debt that continues to grow. it truely is a sad state when world banking forums laugh at ZH rather than use it as a wake-up call to common fucking sense. elections are not won this way and taking away entitlements is not popular, yet, the only way civilizations can survive is not eat each other. again, unfortunate but its the path we are on. every idiot in the street will point to stock markets at all time high, yet, they forget that the prior blow-down we had the same "record high earnings" but were triggered by a credit event. once again, ZH had it right that THAT was the time to FIX things thru a massive restructure. instead, we moved the problem from 1 side of the ledger to the other allowing us to "buy" more time but in-essance, creating a bigger bomb.

i continue to come back to 1 point my father taught me as a child - you can only do the wrong thing for so long before something really, really bad happens. this purchasing of your own debt with money that doesn't exist - i can't think of a better example thats more closely tied to what my father said. the drugs feel great now, but we are gonna be skipping de-tox all-together and go right to the monetary-system-grave at the pace we're going.

Fri, 03/06/2015 - 12:46 | 5861638 Temporalist
Temporalist's picture

Your dad would have been hung for thinking that unicorns don't shit bernankebux to save terminal cancer babies.

Fri, 03/06/2015 - 12:04 | 5861456 Augustus
Augustus's picture

Gold.  Gold.  Gold.

Moar.  Moar.  Moar.

To the Moon.  The Moon.  the Moon.

Fri, 03/06/2015 - 12:57 | 5861693 crzyhun
crzyhun's picture

No question but that the fomc trolls are jonesing for higher rates. The withdrawal when it happes will be f/g amazing...

Fri, 03/06/2015 - 13:39 | 5861874 LawsofPhysics
LawsofPhysics's picture

Sure, if it happens.  Then numerous and massive defaults....

not very optimistic.

Fri, 03/06/2015 - 13:50 | 5861914 Bastiat
Bastiat's picture

Percentage of US budget to pay interest on debt will be fun to watch when rates go up. 

Fri, 03/06/2015 - 14:00 | 5861950 gcjohns1971
gcjohns1971's picture

Nope.

 

They're anesthetized by QE at present.

Fri, 03/06/2015 - 14:52 | 5862184 drdolittle
drdolittle's picture

I can't see bonds as anything other than a short term play. You may sell them for more when rates go down. You're still getting paid back in monopoly money.

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