Treasury Yield Curve Crashes To New 10Y Lows After Hotter-Than-Expected PPI

Tyler Durden's picture

With a December rate-hike baked into the cake (odds as close to 100% as possible), the hotter-than-expected PPI print has sparked notable outperformance in the long-end (amid Fed-driven slowdown fears) sending the yield curve to new cycle flats - flattest since 2007...

 

The last two times the yield curve was this flat, the US economy was in recession...

 

As a reminder, it took The Fed driving rates up to 5.25% before financial conditions finally snapped tighter...

 

But The Fed has only around 100bps of tightening space before the curve is inverted this time.

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wisehiney's picture

Policy error.

TLT

FreeShitter's picture

I'd rather watch paint dry.

4shzl's picture

Green. 

Coupons for 912828G38 and 912810QY7 hit my account tomorrow.  No action, no drama -- just money.  Very boring.

More boring, PLEASE.

 

wisehiney's picture

Yep, even printing money can become tiresome.

DerdyBulls's picture

Let's see how this portends for the new normal.

buzzsaw99's picture

do the whole hundred right now bitchez.  i triple dog dare you.

DEMIZEN's picture

the market is getting heavy. heavier than a bitch pushing a full cart of twinkies, soda, and beef ground. but somehow, this will turn to be good news and a buy.

eclectic syncretist's picture

Feels kind of toppy to this old-timer. Volume has gotten so low, and valuations so high it feels like there must be some substantial air pockets below. However, if the Fed is going to just buy all the stocks (illegally, I might add) everytime they begin to equilibrate towards true value, they could continue to make the situation even worse.

DEMIZEN's picture

what is worse misalocation or no alocation at all? it depends whom you ask. a competitive .gov doesnt care who is running the show in the long term as long as the base is paying taxes i assume. if the central bank is controled by.gov they will always try to inflate themselves out of trouble.

maybe the fed is just not as independent as it used to be back in reagan times? maybe the money supply is indeed controled by the tribe

Blue Dog's picture

It's more like the central bank controls the government. As well as the mainstream press and the educational system.

syzygysus's picture

The Fed:  Hey, let's try another experiment!

lester1's picture

Why buy US Treasuries at 2% a year when you could buy ROKU stock and make 5-7% in a day ??

FreeShitter's picture

Just dont get greedy, ROKU will get punished eventually.

Blue Dog's picture

You're half right: When real inflation is at least 7% why would you buy treasuries at 2%?

Hardly nobody does. That's why the Fed will print until the dollar is dead. 

That's good news for us gold, silver, and Bitcoin holders.

EmeraldWI's picture

Rise in oil prices election to date about $.50 or $50 billion to consumers. There goes their big tax cut.

bobert727's picture

Greenspan left rates too low for too long leading to reckless speculation. It's deja vu all over again. Except this time, instead of the average American holding piles of debt, the US Government is sitting on $20.5 Trillion and the Fed $4+ Trillion. Too big to fail? I think not.

eclectic syncretist's picture

"With a December rate-hike baked into the cake (odds as close to 100% as possible)"

I'll believe they have the courage to do it when it happens. Until then, 100% is hard to believe.