Policy Error? Treasury Curve Crashes To Dec 2007 Lows

Tyler Durden's picture

Dear Janet, the bond market's not buying it... at all...

The Treasury yield curve (2s30s) has plunged post Yellen to 143bps... flashing a big red "policy error" warning as Yellen's faith in growth is dismissed by bond traders...

 

This is the flattest curve since Dec 2007...

 

As BofAML previously warned,

If the Fed does raise rates, however, that doesn’t mean the “all clear” signal will have been sounded.

 

To the extent investors view the hike as a policy error, a flight to quality is likely to follow with the Treasury curve bear-flattening and risk assets selling off.

 

Even if investors don’t overtly seem to believe a rate hike is a policy error, it appears that many investors believe a rate hike will be accompanied by extremely dovish language, possibly to offset the sting of the rate hike.

And 12m Libor - 10Y Treasury yields have now inverted...

 

How much longer can US banks ignore it?

 

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Bilderberg Member's picture

Janet's Punch Bowl: Party for the stock buyers and hangover for the savers.

venturen's picture

Janet...Banker Whore is more appropriate....everyone enjoys a punch bowl...a whore is only for those that pay!

adr's picture

SO everything is pointless and meaningless other than BUY STAWKS CAUSE YOU CAN'T MAKE MONEY ANYWHERE ELSE.

The "Market" has become nothign but a manipulated policy tool divorced from reality forever. SO take your $500 you have in savings Americans and in two more years you can have $700. The stock market is awesome and $700 will make you rich, RICH THEY TELL YOU!!!!

What is the point of an ever inflating stock market if nobody outside the 1% has any cash to invest in it?

Oh yeah, that is the point. 1% print wealth, 99% have to live in the gutter.

Oldwood's picture

What do you mean by "make money"?

I still work for my money, unlike most on wall street.

Of course if you mean "make money" without work or any meaningful production of product or service, then yes, the grand casino funded by the US government is the only game around.

Soul Glow's picture

Everytime Yellen says she's thinking about raising rates the markets roll over.  Expect in about a week equity to drop and gold to move up.  It will likely lead to European bank drama, and the ECB and BoJ to buy moar of everything, at which point Yellen will once again balk and the markets will stablize.

Yet this policy one day will either lead to the biggest equity crash/bond crash ever, or hyperinflation of the dollar.  

Dr. Engali's picture

Treasuries have been screaming liar liar pants on fire for years now, and dey have been berry berry goooood to me.

Muad'Grumps's picture

You know why the bond market is not buying the rate hike spiel? Because it read the speech and not the narrative-spinning headlines!

jamesmmu's picture

Here you go, dow meltdown starts right now

http://www.marketwatch.com/investing/index/djia