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Bond Blood-Bath Continues - 5Y Yield Nears Key Technical Resistance

Tyler Durden's picture




 

The carnage in Treasuries continues as this morning's chatter from 'sources' about moar NIRP in Europe has seemingly sparked a sudden exodus from US bonds (even with stocks lower). Across the curve yields are up 4-5bps very suddenly - all testing (if not already broken) 2015 highs. Perhaps most critically for now is the 5Y yield which is surging towards 1.80% - a crucial level of resistance over the past few years.

 

The entire Treasury Curve is now higher in yield than at the end of QE3...

 

With 5Y pushing towards a crucial level...

 

Charts: Bloomberg

 

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Mon, 11/09/2015 - 10:37 | 6767189 buzzsaw99
buzzsaw99's picture

yee haw bitchez

Mon, 11/09/2015 - 10:40 | 6767194 FireBrander
FireBrander's picture

Looks like the shift continues...

 

OUT of "Safe" UST

IN to High Yield (High Risk) corporate DEBT!

http://money.cnn.com/data/bonds/

Mon, 11/09/2015 - 10:41 | 6767200 El Oregonian
El Oregonian's picture

Where's Nero's fiddle? I am sure that 'der Leader' has requested it.

Mon, 11/09/2015 - 10:47 | 6767220 messymerry
messymerry's picture

Hey buzzsaw, isn't that what Major Kong said as he rode the bomb down???

I don't think this is the "big one".  Hopefully, it won't explode until Hitlery is immaculated and then Kaity bar the door. 

It will be torches and pitchforks time,,,a party in the 'ol town tonight,

;-D   

Mon, 11/09/2015 - 10:47 | 6767224 junction
junction's picture

The U.S. is now run like a bucket shop, just like Europe.  So, when some of the muppets know the score, they look elsewhere to invest their dwindling funds.

Mon, 11/09/2015 - 10:38 | 6767193 yogibear
yogibear's picture

More smaller banks are going to shut their doors. The bigger banks get bigger.

So the big banks eat the small banks.

Plenty more empty buildings.

Mon, 11/09/2015 - 10:45 | 6767199 Dr. Engali
Dr. Engali's picture

Okay, I'm a bit confused here Tyler. Why would NIRP in Europe create a sell off in U.S treasuries? If anything NIRP and the carry trade would create a rush towards yield. It seems to me that the sell off in treasuries is related to the fact that it's looking like the fed is really going to raise rates (even if it's only to lower them again in a few month).

Mon, 11/09/2015 - 13:31 | 6768178 Restcase
Restcase's picture

Unlimited Nirp = unlimited bond appreciation, right? You just need to offset the fee (nirp) or front run announcements of more future nirp.

Some calculations offset nirp against the deflation rate to come up with a positive number.

See this for a list of why nirp bonds get bought:
http://www.zerohedge.com/news/2015-01-31/16-global-government-bonds-now-...

Mon, 11/09/2015 - 10:42 | 6767205 madbraz
madbraz's picture

it's auction week, duh.  they scheduled 10yr and 30yr auctions for the same day and increased them by $3 billion each (which then they instruct the MSM to say that the bid-to-cover was weak and not mention the higher auctioned amount).   not corrupt, yeah right.

Mon, 11/09/2015 - 10:44 | 6767212 Francis Marx
Francis Marx's picture

Looks like Armstrong has been right all along about Government bond disaster cometh.

Mon, 11/09/2015 - 10:53 | 6767259 SoilMyselfRotten
SoilMyselfRotten's picture

Nothng a huge equity drop can't cure, gotsta usher all that fleeing money back into UST somehow.

Mon, 11/09/2015 - 11:51 | 6767578 Francis Marx
Francis Marx's picture

That just makes the UST market even a bigger bubble for the popping

Mon, 11/09/2015 - 10:48 | 6767232 youngman
youngman's picture

They should be dropping for just economic reasons...let alone the Fed raising rates

Mon, 11/09/2015 - 10:52 | 6767254 negative rates
negative rates's picture

Forget the Fed, the mkt will raise rates.

Mon, 11/09/2015 - 12:25 | 6767771 KnuckleDragger-X
KnuckleDragger-X's picture

Technicals=tarot cards, but that pesky hangman keeps coming up.......

Mon, 11/09/2015 - 11:23 | 6767432 gcjohns1971
gcjohns1971's picture

The banker-led debt-based fiat-currency system was from day 1 a highwire balancing act of creating JUST enough new debt, with which to back new money JUST in time to roll over the maturing bonds which backed the last ones.

In the meantime the snowballing accumulated interest costs over decades have outpaced technological lowering of output costs, making real production less and less accretive, at the same time that it has made pleasing bankster and government cronies more accretive.

Because currency creation does not create material wealth, but only redistributes it, this means that everyone other than the money printers & governments are continually getting poorer under this system than we'd otherwise be.

And that makes the monetary balancing act between expiring bonds and new ones all the more perilous.  For the system requires that most money be spent, to keep velocity up, and to keep that currency available for debt rollover.  All policy is focused on that end...keeping people from saving.

Yet simultaneously, one iota too much spending (trading away currency for goods and services) and the goods and services will climb in value vs the currency.   And no one wants to hold onto a crashing currency according to Graham's Law.  Which makes this a self-reinforcing cycle.

It is rather, I imagine, like juggling while walking a tightrope.   Except this tightrope becomes thinner and thinner as the juggler progresses, while the balls being juggled become larger and larger.

The image is apt.

The only question is when will the inevitable happen.

(Or when those who own this system will understand it requires a reset, and capitulate on the concept that the system needs a counter-party-free numeraire to allow some financial assets to survive that reset...lacking which all values and prices are arbitrary.)

Mon, 11/09/2015 - 11:42 | 6767532 I Write Code
I Write Code's picture

Look at a one year chart folks, this ain't nuthin yet, it's not even back to last July's levels.  Until and unless it gets a lot higher than this, back to 2014's highs, don't mean nuthin.  Just Janet moving the furniture to vacuum.

Mon, 11/09/2015 - 12:21 | 6767747 InnVestuhrr
InnVestuhrr's picture

If the FED raises rates after 7 years of ZIRP and QE,

OR

If the market believes that the FED will raise rates after 7 years of ZIRP and

then

ALL fixed-income assets will sell off quickly and deeply

because this change in rate level is sending the absolutely clear message to ALL fixed income asset holders that their fixed-income assets are going to decline in market value, ie everyone who can sell, will sell. That will cause serious global disruption.

 

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