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Treasury Curve Flattest In 7 Months As 30Y Yield Drops Under 3.00%
Treasury yields are at the lows of the day (despite relative equity strength) as this morning's triple whammy of weak data (CFNAI, PMI, and Existing home sales) confirms fears of Fed policy errors. The extreme short-positioning across the entire Treasury complex is likely making a few nervous as 30Y yield breaks back below 3.00% for the 3rd time in 3 days.
Aggregating across the entire Treasury future complex, speculators are the most next short since the end of QE1...
(NOTE: the above chart aggregates 10y-equivalent futures net positioning)
And, despite equity strength, Treasuries are rallying (yields dropping)...
With 30Y now breaking back below 3.00%...
As we noted previously, the last time the combined levels of short bonds and short VIX were this extreme was as QE1 ended in 2010... This happened next...
This could be a major problem for the "Buy Financials" narrative... 2s30s are now at the flattest in 7 months!
Charts: Bloomberg
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Why would someone short long duration government bonds when going into a recession? That's exact opposite of what everyone normally does. Strong economy = risk on. Collapsing economy = risk off.
The problem with 'risk on/risk off' is that 'risk' probably isn't defined correctly. Bonds, especially at these yields, are likely far riskier than most other asset classes.
Going to take a while for that gap to close: With Black Friday and Cyber-Monday "data" comin' up, ES makes new all-time highs next week. At least that is the seasonality trade.
Then How the fuck does Gold continue to plummet.
Ctrl P
As long as the banker types are fat and rich, they can afford to sell a few contracts to keep the allusion of monetary stability. Sort of like the geeky kid whose folks bribe 'friends' to attend their birthday party with extravagant gifts.
But as the banksters lose power, due to, for example, rising interest rates (deadly to bankers and the FIRE sector), the suppression will come unwound.
This isn't happening anymore...
http://www.zerohedge.com/news/2013-06-14/stunning-images-china-ten-thous...
It's only plummeting on the COMEX. Wait until people figure out that China has bought just about every ounce mined in the last 2 years and it will be at $2000 in no time