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Well That Hasn't Happened Before - Exhibit 2
We have never, ever, seen the long- and short-end of the Treasury yield curve so anti-correlated.
The 2Y and 10Y yields have never been anti-correlated (on a 2-year rolling window) and now are strongly anti-correlated.
Day after day we are told that a recession cannot be near since the yield curve is not inverted (a meme we previously destroyed here and here) and while the current 2s10s curve is near 7-year flats/lows; with ZIRP the yield curve's signaling ability has been diminished greatly.
The apparent collapse of the yield curve's internal relationship seems predicated on the myth of a 'strong US economy' driving up short-term rates on every jawbone by The Fed, and the reality of global deflation, liquidity squeezes, and debt saturation that is weighing on economic growth prospects, structurally weighing on long-term rates.
Chart: Bloomberg
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Reality is just around the corner.....
Looks shiny to me, full speed ahead!
I watch the three year. looks like no interest rate hike.
am i missing something? moar demand for ten and less for the 2? and who is buying?
i hear the belgians are really big fans of our debt instruments.
Haven't read about Belgium for quite a while...
Yes, I'd noticed that too. Nothing to see here, move along........?
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too disinterested to coordinate an effective response,
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And I have never, ever seen a blue eyed, red headed Asian chick with three tits...
Try looking on Tumblr.
Total Recall. Except I don' think her hair was red. And she might not have been Asian. But - three tits and yer out...
where is your sense of adventure?!
Try a visit to Fukushima Prefecture.
We keep looking for rationality or at least some connection to fundamentals in the market place...even in society for that matter, but anti-correlations seem not to matter any more. Its as though we have a new reality and this is only the beginning. I have a feeling that we are going to see a lot that we have NEVER seen before.
I feel the same way and hope we're right. Times they are a changin'.
The words rational and real no longer apply....until they do.....
Like tanks in the streets.
Is Japan doing the same thing? I haven't gone and looked at the actual yield curve but here and Japan I started noticing the short end of the curve doing some crazy popping the past couple weeks ...
So-called "auction" prices here: http://asianbondsonline.adb.org/japan.php
Ever see the FED print $4 Triillion dollars and give it the crooks that broke the financial system before?
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"The Twilight Zone".
Here's the truth. Economy, my president!
http://research.stlouisfed.org/fred2/series/TREAS1T5
And look what's happened since QE ended.
http://research.stlouisfed.org/fred2/series/TREAS911Y
Well said!
we are all just frogs boiling in debt soup.
thats not soup. its your blood.
Flight to "safety"?
Perhaps the big money figures the 10 year is a good place to hide out for a while.
Who cares. Nobody is going to pay it back anyhow.
This chart shows that 2y rates are leading 10y rates down. Nothing new there. It accelerated for obvious reasons with the financial crash, but it is moving closer to past relationship.
I suspect if you did the chart log scale, it would be closer still. This is a non event!
Nice flattening yield curve, recession is nearer.
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