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Visualizing The History Of The World's Yield Curves In Glorious 3-D
Back in July 2010, when Zero Hedge first looked at the history of the US bond yield in all its 3D glory, we showed where it was at that moment...
... and where we thought, back then, it was going next:
it is now obvious what the Fed wants to achieve, as it gets ever closer to using the last available nuclear option: outright monetization of every single asset class. The graphic representation of what Bernanke would like more than anything to be the economic reality is presented on the chart below.
Five years later, we are happy to see that the idea of showing the US treasury curve in its chronological 3D glory is alive and well, courtesy of the NYT, which has created the same charts only adding a delightful interactive component.
More importantly, we can observe whether our forecast for the Treasury curve has panned out as expected. Well, 5 years later, QE3, Operation Twist and QE3, not to mention another 5 years of ZIRP, the entire US curve is indeed well on its way to becoming as flat as pancake, and yes: since 2010 every single point on the curve has hit all time lows at least once.
And while we are confident our projection of a flat curve is just a matter of time, we did miss two things: i) we ignored to look at foreign Treasury assets and ii) we did not anticipate NIRP.
We should have.
Here is the German bond yield curve, which is not only that much closer to our 2010 prediction of "flat as a pancake", but thanks to the ECB the entire front part of the curve is now trading below the X-axis!
As for Japan, well, with the BOJ now monetizing more than 100% of all net issuance, it is only a matter of time before the entire curve is horizontal and sinking into the negative void.
And then, one fine day, when the world finally loses all faith in the academics who populate the Bank of Japan and the ECB, and the FED and so on, it will all simply disintegrate, as one after another fiat currency becomes Weimar'ed.
Check back in 5 years to see if this prediction has also come true.
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Look at the curve on that French yield though, trumps them all.
They can try to hold onto their little sand island universe but it's impossible to stop the wave of change.
Looking at these graphs makes me dizzy. Someone summarize it for me.
Another about-to-fail attempt at controlling market forces.
Check back in 5 years to see if this prediction has also come true.
At this rate, I'll not make it 5 years...
Everything is timing. You need to be right in the near AND long term. Only very strong hands can wait out mistakes in the market.
Only very strong hands can wait out mistakes in the market
Would be hard pressed to called what is being witnessed as mistakes in market. The first question should always be: "Is it really a market (at all)?"
When the price of paper equities are an inverse of the USD FX, with thanx and a tip of the hat to our very famous Genocide Exchange, Mommy FED, so ripe and fertile her breasts swell with meaningless sovereigns and graciously floods the ATM machines with her nutrient poor soured milk of USD not worth the paper dey be printed on - and then unsurprisingly, and to the nano second, it bursts from Momma Fed's bursting ripeness swamping the FX board, almost like a setup, the "loosing on sales and shedding employees but raising dividends and more subsidies from the commons" issuers funny paper bones up to orgasmic highs!
So, is our so called market really really a market?
Of course our public service employs have made sure to not call what they do "insider trading" and only have to report every 6 months after everything is done. If they reported when they traded it would start a whole new kind of "coattail trading" strategy. As it is, Hedge funds have to report their 13F every quarter (+15 days), See how our employees do shit - a hedge fund is more transparent than they are.
So, if one believe the "market" is really really a market, then we have the issue of casting what has been going on as "mistake".
If one needs to believe that the really really is a "market" and that stuff like flash crashes are a mistake, guilty but with an excuse blaming it a fat finger (those systems are automated - no fat finger mistake could ever be claimed), then one might go along with the well garnished depiction of what happened like twiiter hacks did it - yeah ... riiiight .. as offered in 2010 by CNBC champaign crow's fav, our very very famous Motely Fool ...
There was no intentional wrongdoing detected in the first flash crash, but the impact was felt by many. Trades in certain names were canceled and deemed "erroneous." The problem was that many traders bought and sold as prices spiked, and not all trades were canceled.
and this
The second flash crash was caused by the intentional manipulation of information when hackers used the Associated Press' Twitter account .... too soon to determine what action, if any, regulators will take either to adjust circuit breakers or to tighten the flow of information from the major social-media sites, but these are the developments that could have the most lasting impact.
There is a good a plausible motive that that the mistake(s), are, instead, a crime, an intentional "pig in a poke" to bleed mom and pop money management shops working the 1 minute ticks using dynamic stop loss backtest allocation trading models. Those shops offer plans from a bread basket of 200, or so, stocks. Those shops don't have an inventory. Some even use slugs like Interactive Broker (lose their customers money and paying brokaerage interfaces to do it - some still use deprecated DDE engines. How does that benefit the "we short what we recommend and sell with pride to those who are hapless znuff to trust us" Russian Mafia running the Street and Capitalism into the ground, one might ask. Well a flash crash blows out all their stops, and in some cases, after all the stops are busted, the mom and pop trading system will take a trading hiatus for that particular stock, for the rest of the market. IOW, they won't be buying it back when the invisible hand puts the stopper in. Gave up a bunch of principal - which is worse, being gamed by the old twitter hack made us do it sham, or, have stolen, Mother Fucking (MF) Global's shtick it up the schmucks backsides double secrets who were unfortunate enough to have deposit accounts under the well intended watchful eye of our very famous and once notibly lackluster employee, The Honorable Hemorrhoid John Corzine.
As Maria always asks guests, with a flutter of her luxurious triple chin, "Is now the time for retail investors to get back into the market?".
I luv it when Gouty Pouty Girl Maria asks that shit! (i'm getting a boner juz `membering her rolley polley flabber-flub-gast)
And the answer is a lways cautious assurance "Sure, the regulators assured us the invisible hand has been taken out of the (tee hee) market."
(and that's why i don't do two shows a night)
Forgot - wish there was a better view of the underside of the first yield curve - was thinking back and recall, with little fan fare from lame stream, that there was an inverted yield - short maturities printed higher yields than long bonds.
So, if I'm understanding you..., you think the market's rigged?
It's a big ten-four on that 'un pachuko!:)
We would like to call it a rigged market. Like it was a "fixable" thingie - like a spark plug wire fell off the number two cyclinder. It would make us feel all comfy and cool. Like a storm that will clear sometime in the next zillion years. It's not a fixable market - it has passed the point of noreturn - it's socialism for fascists - only El Douche's ghost can describe how the commons typically fixes that stuff.
It's not a market - it's a pig in a poke - except for what the blind call it - if it is not a market, then it can't be fixed or have a few mistakes here and there that undone "stongs hands" can unravel. It's a load of drano and a good flushing out - followed by building a real captalist rule based system - of course to do that - we gotta lay down a bumch of roach motels in DC, state and local welfare systems for pin stripped Amani kiddie lovers and the Russian mafia that benefit from them on the street.
Our only problem is learning to call a spade a spade, again, and, the availability of roach motels.
Means that if you think we're exceptional and the Liquidity Trap and slow, high risk economy ain't gonna come home to America (a la CNBS et al) then you don't need to wait to buy your income producing assets until it's too late and 10's are sub 1% and the long guys not far over that. Getchur low risk income assets while you can.
Countries like Bulgaria are selling 10 year paper denominated in USD at 2%+ a tidge.
Go for it.
The universe of negative nominal rates is gonna be a real bitch, folks.
Everything you know about economic relationships goes bye bye.
Everything.
"...Everything you know about economic relationships goes bye bye... Everything."
Even the KY, knukles? Geeze... that's kind of harsh.
Well, OK
If you want your KY, you can keep your KY
Where have all the cowboys gone?
outcasts.
Neutered...
Let's visualize the history of the Fed instead...and Greenspan, and Edward Quince and Auntie Yellen. And lay it over a chart of the 1%'s bank accounts. Voila!
There's a large area of south-central Australia that is underneath sea level, yet is a dry desert. Thats what this graph reminds me of
What would happen if we dug a trench from that place out to the open sea? Humanity has the ability to control nature yet it cannot control it's own nature.
They already thought about that.
it looks just like that sheet that got stuck in my printer the other day
We have to wait 5 years???
You impatient ZHers kill me. "What do we want?" "Economic collapse!" "When do we want it?" "Now!" Like as if that's when the fun begins.
Uh, there's a lot of adjectives that will describe what it will be like, but "fun" ain't gonna be one of them.
You impatient ZHers kill me...
It might be better to think of our situation as having a festering splinter under your thumbnail for the last 6 years. Only this sucker ain't disolving or going away on it's own. And for that reason, yeah, it would've been better to have taken care of it 6 years ago rather than facing the prospect of now having to amputate in order to find the relief these federal reserve control frauders have foisted on the people of the US.
Ya know, I could almost stand to see a continuation of frns if the treasury secretary "signature" on the note was William K. Black's.
http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&u...
Any reference to negative nominal rates in past history have been deleted. Sources that report rates fairly on treasuries are far and few between because treasury bills only trade in the secondary market. Negative rates occurred for a time on U.S. Treasury bills in 1938. The NY Times should have made a reference to this fact.
All references of a 'pop' into negative territory, such as during the debt ceiling fiscal crisis have been withdrawn as an anomaly, though short intervals are usually accompanied by longer stretches. These short intervals have already occurred.
Negative nominal rates did not result in a lower Swiss Franc, nor did it result in a rout in the DAX. A rout in major Indeces will see negative rates become a reality in th U.S. The U.S. is concerned about the Swiss experience, since their currency rose despite negative rates.
DOW 20,000?
Yes, and eventually, way beyond. It's only numbers dude, not value. If the dow were down, it would mean your fiat money became more valuable.
Theoretically a Declining Bond Market, long term Flat Bond Market... is incredibly Bearish.
You can't build a nation with a Bearish Bond Market, but... I admit I am not a Financial Manager.
Has the USA changed from using Bonds to Build Businesses... to crazy dot com & tech stock bubbles that make no sense... are we to assume that IPO and Secondary Offerings are the Future of Building Businesses and developing Real Estate, Housing Developments, Industrial parks, and Malls??
Just a question. What is it 20-30 years bear bond market.
US zero rates correspond to Obama's spending and debt orgy. With the massive debts the US govt has accrued, do you think they'll ever let rates rise? You've got to be kidding.
If the economy deflates severely, though, the Fed can either buy all the securities it desires or sell the same and the result will be the same: rock bottom interest rates. if we have economic collapse, it's full speed ahead to the zero bound.
Massive inflation about 7 years out. I suggested the yield curve was going to steepen from the short end(2-3 years) out to the belly. massive s/t deflation as the economy retracts, then uncertainty out to 5-7 years. (inflation from lack of production capacity)
(inflation from lack of production capacity) or simply massive print of money to counteract their dreaded deflation.We don't need no stinkin capacity if there is no income with which to buy.
nice curtains in the graph at the top.
why buy a barbaric, tangible asset when
these type yields offer so much promise?
So, in the past the bond vigilantes would not have allowed this to happen but what is different now is the fed itself is now the predominant vigilante?
I feel so very sorry for the children. They're going to be forced to make decisions that we never imagined.
The destitute lives most of them are going to live, will instigate even more reliance on artificial stimulation.
Children will be tought to obey and not think. Their comprehensive skills will revolve around the hive. They will submit, without questioning authority.
all look like toiletpaper hittin the floor to me.
It's all uphill from here...or into the ocean
Nations will fight openly soon to survive
and when they invert, the mother of ALL sell-offs and a recession unlike any we've ever seen will be heading our way...
and when they invert, the mother of ALL sell-offs and a recession unlike any we've ever seen will be heading our way...