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"Low" Inflation Print Sparks Panic-Selling In Treasuries

Tyler Durden's picture




 

Because nothing says "sell bonds" like a dismally low inflation print. From the moment CPI printed (lower than expected), Treasury yields started to rise and accelerate higher as traders reflect on the chances of a delayed Fed rate hike... bad-enough news is bad news for bonds (for now) and stocks...

 

10Y yields jump on lowflation...

 

and stocks slid...

 

The long-end is underperforming notably as 2Y limps higher..

 

Charts: Bloomberg

 

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Wed, 08/19/2015 - 09:20 | 6443256 headhunt
headhunt's picture

Rate increase prep

Wed, 08/19/2015 - 09:40 | 6443325 TeamDepends
TeamDepends's picture

>$14 AG gone forever

>Nahhh

Wed, 08/19/2015 - 11:19 | 6443735 Pool Shark
Pool Shark's picture

 

 

UPDATE:

Reversal. Rates headed back down:

http://www.google.com/finance?q=INDEXCBOE%3ATNX&ei=Rp7UVfmEG6jLiQLDp7-oCw

 

Wed, 08/19/2015 - 12:21 | 6444003 Dsyno
Dsyno's picture

Yep. This article spoke too soon. Yields have crashed back down to 2.16%.

Wed, 08/19/2015 - 09:20 | 6443257 Panafrican Funk...
Panafrican Funktron Robot's picture

"Because nothing says "sell bonds" like a dismally low inflation print."

Yeah, the margin unwind currently in progress is going to destroy every asset price.  Funny what happens when trillions are pumped in such a way that artificially increases the prices of both stocks AND bonds, and then said pumpers run out of ammo and even hint at trying to reverse course.  

Like the St. Louis Fed said, QE doesn't work at fixing what's real.  It was a pure nominal asset repricing play to mask the ongoing destruction of the real economy.

Wed, 08/19/2015 - 09:20 | 6443259 firstdivision
firstdivision's picture

So glad historic norms have held so well since the "Great Recession" ended 6 years ago.

Wed, 08/19/2015 - 09:25 | 6443280 Keltner Channel Surf
Keltner Channel Surf's picture

Guess "sell the news" works w/ fixed as well.  Or, it could be machines suspect month-old FOMC minutes will be more 'hawkish' than current data and world currency turmoil would suggest, and are getting in early on the 2:15 reaction.

Wed, 08/19/2015 - 09:28 | 6443290 gmak
gmak's picture

I believe that we will see the same downward price pressure in any good and service for which free money (read debt) has been readily available to all without regard to their abiliity to repay. I include educatiion, automobiles new and used, and any "don't pay a cent until 21xx" consumer good. You can add your own pet peeve to this list. I'm sure that it is a long one. [also, houses in Canada]

Wed, 08/19/2015 - 09:31 | 6443299 aliki
aliki's picture

these guys on CNBC are histerical. what i learn from cramer:

1. there is never a good time to raise rates

2. all he cares about is stock prices, not senior citizens, those close to retirement who depend on fixed income, no/lo-risk investments

3. he has no clue how pension funds operate: they NEED an alternative to stocks. they have ALL been FORCED into stocks for 7 years. the longer we stay at zero, the more they are compelled to continue plowing into dividend payers, compounding the problem.

quicker you deal with the problem, quicker you solve it.

longer you put off the pain, the more painful it will become.

its that simple IMO

Wed, 08/19/2015 - 09:31 | 6443300 Dr. Engali
Dr. Engali's picture

I wish I could experience some of this low inflation.

Wed, 08/19/2015 - 09:35 | 6443311 buzzsaw99
buzzsaw99's picture

transitory

Wed, 08/19/2015 - 09:37 | 6443314 ajkreider
ajkreider's picture

Tyler has officially jumped the shark when we see lines like "dismally low inflation print".

Wed, 08/19/2015 - 09:37 | 6443315 Fishthatlived
Fishthatlived's picture

Isn't Gartman long again?

Wed, 08/19/2015 - 09:46 | 6443346 SSRI Junkie
SSRI Junkie's picture

if past history follows, just another herd of shorts being setup for slaughter

Wed, 08/19/2015 - 09:52 | 6443364 buzzsaw99
buzzsaw99's picture

this

Wed, 08/19/2015 - 09:56 | 6443379 VW Nerd
VW Nerd's picture

I wouldn't flick my Treasurys until I had disposed of my JGB's and Bunds.  Looking at where they are priced, I think they'll go first.  Just my opinion. 

Wed, 08/19/2015 - 09:59 | 6443388 Downtoolong
Downtoolong's picture

 

Cheaper Housing, Cars, Consumer Goods, PM, ……OMG, this deflation thing is just terrible,

 

Unless you happen to be holding cash.

  

Wed, 08/19/2015 - 13:23 | 6444260 sandhillexit
sandhillexit's picture

Isn't this just China selling Tbills and notes into the "good news" for bonds?  They need to sell Treasuries to have ready Dollar deposits at JPM  to sell to buy CNY because...they need to support the CNY after they undermined confidence in it.  And undermined confidence in their own economic management.

Because they wanted to show the US who's boss.  

Why not demand the whole hog?  You are China, after all. Until being "the cleverest guy in the room" means that you've set off an avalanche.   

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