Bond Blooodbath Leaves Entire Treasury Curve Underwater For 2016

Tyler Durden's picture

The collapse of the US Treasury market in the last two days has sent the entire curve (from 2Y to 30Y) higher in yield on the year....

The belly is underperforming with 5Y and 7Y worst (+20 and 21bps respectively) with 2Y 'best' - yield up 'only' 11bps in 2016...


And US bond markets are drastically underperforming the rest of the developed world...

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
bruinfan's picture

Wake me up when the 10Y is yielding 5%.

abyssinian's picture

Doesn't look like anyone cares about bonds these days..... Long as the rigged stock markets kept going up, that is what matters the most! 

Go Robot Traders! 

Hohum's picture

Yes, underwater by 1-2% YTD, while S & P up 9-10%.

LawsofPhysics's picture

Correct, of course, what both of those things are priced in is important too.

Soul Glow's picture

The treasury market is bigger than the stock market.

King Tut's picture
King Tut (not verified) Soul Glow Dec 1, 2016 1:07 PM

Damn Yankees

AlexCharting's picture

A common strategy is to increase fixed income holdings when retirement approaches..... many retirees are in for a very rude awakening. 

Raffie's picture

Bet they have a Robot Trader named Bender (from Futurama)

MaxMax's picture

If rates keep going up, it will eventually tank the stock market - and lots of other asset classes as well.

Bay of Pigs's picture

I thought housing always went up.


A. Boaty's picture

My realtor sez now looks like a good time to buy./s

besnook's picture

will the the fed push it higher? enquiring minds want to know.

Seasmoke's picture

And they have a strangle hold on Gold since the night Hillary sent Podesta to the podium instead of her. $200 in 3 weeks !!!!!!!!!

Soul Glow's picture

Someone ask Mnuchin if this is what he had in mind when he was considering 100 yr bonds.

LawsofPhysics's picture

Looking forward to all Trumps "infrastructure spending"...



Osmium's picture

XIV getting slapped today.  Someone buying protection?

Al Huxley's picture

Not to worry, rising interest rates will be good for retirees, as long as they don't own any bonds right now, banking on the rising price to offset the 0 interest.  Welcome to the casino granny, hope you like cat food.

NoBillsOfCredit's picture

IF you are able to find any.

Al Huxley's picture

...and don't even worry about what rising rates will do to the debt load, pay no attention, the money masters have it all in hand.  Just because they've never done this before doesn't mean they don't know what their doing.  

highly debtful's picture

You know what your problem is? You're way too negative. You focus on nothing but pesky details.

Besides, isn't pessimism against the law these days? 

King Tut's picture
King Tut (not verified) highly debtful Dec 1, 2016 2:07 PM

Doing your best Oddball from Kelly's Heroes

scoutshonor's picture

Not only have they never done it before--it has never been done before.  No data available to provide some clue as to what will happen when it is all unwound.

They have bet the farm without any beta testing and no plan B.  Breathtaking Hubris on a monumental scale.  The difference between this play and those of days gone by is that the spectators will meet with nemesus instead of the actors.

GoldenDonuts's picture

Data?  You don't need data to know that everything leveraged will be worthless if rates go too much higher.  (Too much higher is anything greater than maybe 1%)

Squid Viscous's picture

Top ticked it again, ZH


LawsofPhysics's picture

Yeah, only Gartman could have done better.

Banker Buster's picture

The Fed is too busy shredding all evidence to give a shit.  They have a little over a month to shred and burn everything related to QE and ZIRP.

Banker Buster's picture

 Odds of rates going below zero or above zero.  hmmmm  tough choices, I'll take stay the fuck away from bonds when rates are at zero.  Yes bond holders are going to get roasted.  

jamesmmu's picture

Looks like bear will get the first win this month, yeah!

NoWayJose's picture

The monthly statements are out. GASP! How can my bond fund lose money! Quick let me call my broker! Sell, sell, sell!!! What do you recommend instead? Buy stawks!


The bond massacre is just getting started.

Soul Glow's picture

What should people expect.  Bonds at all time highs, stocks at all time highs, real estate at all time highs, dollar at decade high.  I'm glad I stack silver, makes bargain hunting a lot easier.

jamesmmu's picture

Even thought I still shorting this market, I hope the yield and stock keep going higher which is the only way for stock, housing market to crash later this month.The dollar shortage news now is happening everywhere around the world, almost got a feeling of out of control.

delivered's picture

I'm still compiling additional information/data points but in looking back at major stock market corrections/crashes, a number of violent adjustments have been preceeded by rapidly rising interest rates over a period of 6 to 12 months prior to the correction. Specifically, I've focused on the relative increase in interest rates as oppossed to the nominal increase. For example, back in 1987 (black Monday), the ten year treasury increased from let's say 7.4% to 9.5% or a 28% increase. One year LIBOR experienced an even higher relative increase.

Fast forward to today where the one year LIBOR has doubled over the past year (100% increase) and the ten year treasury has increased by 60 to 70 basis points over the past 3+ months (30+% increase). The SHIBOR in China is going vertical as are other interest rates around Europe.

Eventually, the rising interest rate environment is going to spill over into equities with everyone waking up one day and asking themselves, WTF just happended. May not happend this year or early next but it's just a matter of time and pressure before the rising interest rate environment crashes the equity party.

I've said this before and I'll say it again. The world and every asset class has been spoiled with 30+ years of decreasing interest rates. If this reverses and we enter a prolonged period of rising interest rates, every asset class will suffer. Period. Some asset classes (e.g., paper PMs priced in USDs, bonds, etc.) are simply leading the way with equities, residential real estate, and commercial real estate soon to follow. There's no escaping this so the world's CB's are going to be pushed into the end game. Either let the market (or what's left of it) set cost of capital rates and watch the ensuing carnage or step-in once again in a desperate attempt to keep rates at the low end (and ultimately unleash a massive global QE program to buy up debt that can never be repaid).

Time to man-up and pick your poison as there's no way out of this debt mess other than my massive inflation or defaults.

Hohum's picture

Good points.  CBs won't let the market do anything.

katagorikal's picture

PMs are anticorrelated with real interest rates, so their peformance depends on whether the Fed's rate rises lead or lag inflation - as we have seen, they are waaaaaayyyy behind, so expect real short-term rates to remain negative for some time (probably decades). Yields at the long end are increasing, they may even be positive wrt current inflation, but are probably still negative over the duration, depending on your expectations for inflation. 

conraddobler's picture

Ok folks I've seen this dog and pony show long enough to call it.


It's all RIGGED, it's all a scam, it's all RIGGED!

The rates suddenly skyrocketing are blamed on Trump and his policies THAT HAVE NOT EVEN TAKE EFFECT YET but a closer look implies no such thing at all.  

What's going on is the elite central bankers have decided to crash the system that was ALREADY DEAD and blame it all on Trump which of course fits neatly with their agenda's of breaking shit and blaming everyone else and then showing up with a new IMPROVED solution but how many times are we going to let them piss on our backs and tell us it's raining?


Is Trump a willing stooge in this?

I don't know I guess we will find out.

big-data's picture

What happens if the selloff goes ballistic? The biggest bubble in history is the one starting to deflate right now, it is the sovereign bond bubble which sits under ~USD 1 quadrillion in interest rate and FOREX rate derivatives. This is a complete analysis of the biggest asset bubble in history and shows the bubble's vulnerability points by network analysis. When this bubble pops all the collateral supporting the leverage ratios of 25:1 in the TBTF banks and 100 to 300:1 for FOREX traders go vertical...  Enjoy!

DC Beastie Boy's picture

Speaking of treasuries, look at this, scroll down, don't know how legit this is.



mo mule's picture

That's our new in country money.  The current dollar will only be used outside the country and the new money shown on here will be for the surf's and slaves that are stuck here inside the US. Inflation of course will need to be off the charts when they introduce this by having a bank holiday over some weekend in the near future!  Then we will have 2 currencies, just like maybe Trump can stop this?  

mo mule's picture

Will the Fed be forced to raise rates by a higher amount? If the 10yr is at 2.60% or better by DEC/14 then the Fed would need to raise by 1% to stay on track with the float, right?  Of course obama wouldn't tell Yellen to crash the markets just becuase Trump won, would He?  LOL