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Flight From Risk: Treasury Plummets To Record Low Yield As Gold Surges
Now its getting interesting. 30Y yields fell the most in 5 months today back to 5 month lows, 10Y yields crashed to all-time closing lows, and Gold surged by its most in 4 months (and 2nd most in 7 months) as stocks started to accelerate lower. Gold is unch on the week now as 30Y is -21bps and 10Y -14bps to 1 1.69% handle - incredible. Between the Philly Fed's confirmation of deceleration in US macro data and Europe's increasingly crescendo-like implosion, is it any wonder that the decoupling thesis has given way to reality. S&P 500 e-mini futures repeated the early rally late fade pattern of the last 8 days but this time it was more aggressive as ES pushed towards 1300. CAT was a dog today accounting for 25% of the Dow's losses and AAPL tumbled further - heading towards a 20% retracement off its highs. Financials tumbled further with Citi inching very close to red YTD (and JPM falling rapidly). Credit markets, which led the selloff, continue to slide but this time with equities in sync. Equities went out at their very lows of the day at 1300.50 (at 3.5 month lows) as VIX soared over 24% to close at its highest in 5 months.
Is BTFD DOA?
30Y Treasuries plunged but 10Y fell to record closing low yields!!!
and Gold is back near unch of ther week as the PMs soared today...
Financials are rapidly losing ground with Citi and JPM about to go red YTD...
Treasuries and Stocks now back in sync and leaking quickly...
as Treasury yields just plunged today - and the very short-end has pushed up in yield by over 3.5bps this week...Are foreign bank US offices selling down their carry-guarenteed short-term bills to repatriate cash?
And credit and equity markets are also now in sync and plunging (but we note we did not see the overhang hitting corporate bonds today - making HYG even more cheap) with HY spreads back over 700bps for the first time this year!
IG and HY credit are now negative YTD in the US and the nominal price of US equities remains comfortably positive for now. We hope this chart gives a sense for how the credit market (which does NOT trade on a USD numeraire - but on a relative-value risk premium - bps) can provide useful information when equity prices (which ARE priced in USD fiat units of account) get carried away on a wind of reflation. It would seem credit remained a lot less sanguine from the get-go...
Charts: Bloomberg
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When the US dollar is your 'safe haven', you know you've hit rock bottom
... time for the FED to step in and jawbone things back up ... that should work for a couple of weeks, then they are going to have to "do" something ...
No, as I've said repeatedly, the dollar will continue to strengthen as the Euro and yen wind down. Actually, for the short run, the dollar is probably one of the best trades you can do.
I don't know what you are saying "no" to .... I agree with you.
Even the homely girl in the bar usually finds a "date" when the clock strikes 2am. The US dollar -- she may be ugly, but its getting late and she's the only one left in the pub that isn't drowning in a puddle of her own vomit ...
And the St. Gaudens golden blonde got whisked away in a Veyron shortly before 10PM.
Lucky guy.
Mostly good earnings after the close and some jawboning to rally stocks is the snenario I see uinfolding tomorrow.
What I see tomorrow or soon is the continuation of the financial equity collapse: bank index BKX on its way to a 7% decline to 40, JPM heading for a 20-something handle, with investors suddenly seeing the camel's nose in the derivative tent and realizing the true risks taken by Jamie in losing 25% of annual earnings in just one trade-position. The earnings quality is now very much in question, the multiples will come way down, and the worldwide derivative risks will come into centerstage focus. But who nose...
I'm with you but market is overdue for a bounce for a day or two.
I'd fuck any girl, any time anywhere
They all need lovin.
hahahaha
People are so out to fucking lunch on the US dollar that it is sickening.
What does the dollar have behind it ? The US has about $100 worth of reserves per person in the US. Switzerland has $40,000 per person in reserves. Get it ?
Get a fucking clue.
The US has about 50 billion in forex reserves. That is barely enough to cover 1 months trade deficit. Dollar bulls are the biggest fucking idiots known to man.
Aren't you the eurobull? lol...
horses... glue factory...
A lot of those reserves in Switzerland are US dollars. The dollar, being the "reserve currency" -- get it, "reserve"? -- means that other countries use USDs as one of the reserves that back their currencies. By law, I think, the other reserves are gold and the UK pound. Gold is not as common as USDs anymore for a number of reasons.
Yeah, but how many nukes/bombers/ships/troops/etc does the US have per capita?
Switzerland, OTOH, was invaded and taken over without a single shot fired, as chronicled by Ferdinand Lips. One man's "strong banking laws" are another's "terrorist tools."
UBS made for a nice Trojan Horse, no?
Petroldollar, but other than that, not much.
This. Comment. Is. Awesome.
Best explanation I've heard in awhile.
The dollar is the homely girl, but gold is the hand lotion... it never lets you down.
Gold, the ever-emphatic twelve-year old girl.
How then this DXY strenghtening? Or is this old chartage?
http://www.bloomberg.com/quote/DXY:IND
ori
Edit, makes sense, it's weakening.
The most important thing to understand here is that QE is done to "lower rates".
There is clearly no need for it.
Rookie here, been learning though. I know, stay away from paper but if I were to be playing with paper would you say that it would be a reasonable move to buy FAZ through this correction and swap it out to TMV at some apparent point?
Thanks
rookie---do not follow financial markets, they may drive you insane before you are proven right
http://www.zerohedge.com/news/how-faz-mobile-promises-lose-996-your-mone...
Read this first
Thanks for the re-post...enlightening and timely as someone was touting FAZ yesterday.
BW
If you're young, go get a job on a farm and LEARN, don't just WORK.
Thanks for all the replies, exactly what I needed. I'm not as young as I used to be, farming is not an option right now but I recently put in a few fruit trees.
All moving so fast now, millisecond to millisecond. What's a mere human to do? Glad I'm just holding some old tradition I got in 2008.
What you are holding is not "old tradition"...it is a "barbaric relic...get it straight.
P. Krugman
I stand corrected.
I'm just a human, Mr Krugman, Sir.
Newsboy, Munger would qualify you as uncivilized.
The new normal is going great for me! How about you?
every leg down in Ag, i have bought more...and when i refinance my house again for the second time in 6 months, i will buy more Ag
Refinancing your house for the second time in 6 months? I hope you have a well thought out plan.
No pooh in my shorts today.
I know that's not you Uncle Warren.
Mr Buffet pants full of poo poo
Warren is dropping bricks, if not properly hedged of course.
Diamond style.
Of course, those bricks are from all of the newspapers he bought today that he thinks he can save with a paywall.
What some people will do for some positive press...
Tells me there will be an upcoming bailout to "save our important print daily media information sources"
You mean his depends are full of shit. His pants are relatively safe until Becky forgets to change his diaper during the break..
May you all be blessed with a bag of silver dimes. ( Fresh eggs and home grow tomatoes too)
you and I, my friend, think EXACTLY alike
Looks like one of the chickens saw your comment. She Junked ya for it.
bdc63
As the Europe debacle continues, I see the WORLDS sheeple(except China,Asia),ME),running AS USUAL to the USD as their percieved safe/r haven........................and that will(as usual) drive it up, and unless the PM's have totally decoupled from it, I expect to get the BUY of my life opportunity.
This is based on, NO QE,before the next major flux(Spain/Italy hits).
Hussein, cannot afford another QE this close to the erection...............so, barring total disaster I see it not happening until HE is re-elected.
IF he loses, NO QE from Romulus.
This is what I am betting on, and just an opinion.
Best way I have found to grow tomatoes? Feed the tomatoes to the chickens and then plant the chicken shit. No kidding. You'll have tomato plants everywhere...
There are few things in the universe that are more indestructible than a tomato seed. If you give the chickens hybrid tomatoes though, you probably won't like the tomato offspring.
It was the disastrous manufacturing report that cooked the goose along with the report of massive layoffs at HP. I can't wait to hear Biden blab about all those new, well-paying jobs popping up all over the place for middle class Americans. What bufffoons. We're "led" by two guys who have never had a job except politics yet they want to lecture us on economics.
criminals like romney control the game not obama or biden - leveraging a bain buyout with debt at 140% of Fair value and dividend out the cash after six months - smoke clears from phony forecasts provided to the junk bond holders - then stiff the suppliers and the pensions and ....go to the house - the same game with CDO's - the system is all about fraud - end to end - that is the reason for everything that is going to.... collapse !!!
I am proud to be a barbarian.
i've read many a post about how bond bulls are idiots and who would loan the government anything for 10 years at 1.XX% but is it possible to be a bond bull AND a gold bug? It seems treasuries on the long end have outperformed pretty handsomely over the past year or so.
There is a TIPS fund (DIPSX) that returned 14% last year. Not sure how they do it, when I see 5-years were selling at a negative interest rate today.
it's the fear that inflation is just around the corner and we can't see it yet. I think they were saying the same thing in Japan in 1990.
Thirty year treasuries beat all other asset classes the last thirty years with an average annual return of 11.8 percent from 1981 to 2011
The bull market we all missed
Richard Russell says bull markets are usually stealthy and only seen in hindsight
Thats why i doubt gold is the next thirty year bull. Too obvious
Maybe we should all be buying SDRs. How do you get one and what does it look like? :)
Richard Russell says bull markets are usually stealthy and only seen in hindsight
Thats why i doubt gold is the next thirty year bull. Too obvious
**************
True what Russell says-not so much what you say--
Does this look like its obvious to you?
http://www.acting-man.com/blog/media/2010/10/Gold-percentage-of-financia...
http://www.acting-man.com/blog/media/2010/05/gold-vs.-past-bulls.jpg
http://www.acting-man.com/blog/media/2010/05/gold-and-other-bubbles.gif
Looks to me like gold has been the outstanding winner for the last 20 years--10 more to go-imo
http://www.acting-man.com/blog/media/2010/05/Gold-vs.-Oher-Assets.png
but is it possible to be a bond bull AND a gold bug?
*************
If you believe in deflation--yes-
Treasuries/dollar/gold all up- with markets and other commodities heading lower-
That is the true deflation trade--"the flight to safety" whether it's real safety or perceived safety does not matter-when the crowd heads for the exits-
Doesn't mean it wont or can't fizzle out--but today--that's the trade-
Bingo.
I +1 on the avatar alone, let alone your not so crazy comment. I can't believe Bachman thought the footlong corndog was a good photo op!?
BW
I know of no law that prevents you from loving Bonds and Gold.
Blythe was too busy to short the metals today, as shes packing in earnest, getting ready to flee to a country with non-extradition laws.
Costa Rica and Paraguay are gonna fill up fast. book now.
Rancho Paraguano -- the roaches check-in. Where they go after their face-lifts, no one knows.
Looking flash-crashy for tomorrow. FB IPO fail on-tap!
I'm hoping for a BATS 2.0
FaceBATS 2012.
SokPOTUS
I'll call ya on that, my money says it takes off like a rocket ship at $38.00, and continues to climb, and then in a few days,weeks, a major wake up call will hit.
Buy @38.00, when it doubles, sell.
May take 48hrs, Less I am betting.
The sheeple are gonna crawl all over this.(thinking its another Apple,Google).
Don't be fooled. This could be a dead cat bounce. Hedge accordingly untill the printing announcement. Then go all in. The Comex OI report will shed some light.
I have noticed that some online PM sellers seem to be taking product off the sale rack. With all this gold and silver selling you would think would have some to part with.
i heard it was short covering.
LongBalls
My Dealer will not buy 10oz bars, or rounds of any kind....................unless their Englehard/JM.
They do not want it they have so much silver inventory.
Au, yeah they will take unless its 2012 dated.
As for the economy, it WOULD take off, if the banks would loan(esp to small to medium sized mfg contractors), their business is thru the roof.They have all they can handle+more, and need more equipment, and a lot more employees, but must have capital to hire and expand.
The Banks are refusing to loan to the mfg sectors.
And Automobiles ALL kinds are selling VERY well.( and not ones with 0% interest).
Awesome, now when will that yeild curve break? What are yeilds in the rest of the western world again? PIIGS don't seem to be flying so much anymore. That is the only question that matters and there is an 800-lb gorilla standing on the U.S. treasury yeild curve.
A -3% 10 year yield is credible.
People will pay for the Fed backstop in what's coming.
~~ Tomorrow, Tomorrow. The FaceBook IPO comes out tomorrow. ~~
And if the market heads down despite that ... FEEDING FRENZY!!!!
barliman
CHARTZ, BITCHEZ!
Technical bounce for gold
Surely ben shalom bernanke isnt gonna make it this is easy for gold bugs
I suspect we have a major deflation scare ahead of us before the printing press gets turned to high speed
Buy your Ag before July 4; it will double by Labor Day. Robama has over 2 choices if he's down 10 in the polls; martial law or outright war (with or without false flag). Either one would be extremely bullish.
BTFD, YFI.
Concerning HYG
http://stockcharts.com/h-sc/ui?s=HYG&p=W&b=5&g=0&id=p30337602177&a=196446156&listNum=2
Totally wrong on TBT, which is now plumbing new lows.
This next leg up in gold and silver will be amazing. We all know it. But why are we sure?
Silver and gold, for 40 years, had one thing going for them: they provided a long-term hedge against inflation, due to their scarcity. But now, they also are being broadly recognized as a hedge against financial collapse.
People used to think that the dollar or dollar-denominated treasuries were the best hedge against financial collapse. Yet the evidence of the fall of the Euro via the Greek economy has proven without a doubt that fiat currency is no longer a viable hedge against a collapse.
This is both bullish and scary. Get used to that. Prepare spiritually as well as materially.
Thanks for the great link!
"No one talks about this much. But you can go to your bank right now and get small rounds of 25% nickel and 75% copper for below spot price. This are called nickels. And they are going to change what they are made from very soon."
Unfortunatly we..as in the Western world will not be buying the gold....but other countries outside of our little game sure will be...that was cemented in today...get away from the fiat was the headline today if you are a small country with a few reserves...
Can anyone here legitimately explain the scenario where it pays off to have invested 20%-30% of one's savings into gold? Everyone on this site professes a hate for fiat currency but cheers when gold goes up in value priced in dollars. Why would you care if it goes up in price? Are you going to sell it for the hated dollar once it gets high enough? And if it gets ridiculously priced, such as $4-5K per ounce, that probably means the economy as a whole is ruined and the dollar is crap. In this scenario, do you think you will be able to trade in your gold for some sort of new currency and will trade at a comparable rate to where gold was priced in dollars? How will I profit from the fact that I own gold besides an increase in pdollar price?
I ask this because I still only believe gold would help in an ALL-OUT collapse - like Mad Max. But even then, guns are more important.
A gold price rise does not require an all-out collapse.
Yes, I realize that. But how to profit then? Trade it out for dollars? Then what? You are just back in the satanic dollar.
I'm thinking that whatever the price will be after the blow-off top and crash, that the gold price will result in higher average price.
I also think that a small producer will provide hefty returns as thei internal rates of return rise parabolically.
Trade it in for land then. Or what ever. It's not that gold investors hate the dollar. It IS that gold investors hate having their store of WORK devalued over time. Money, what ever it is, has it's value judged by the amount goods or services it will buy. In a fiat world that money is called gold. All others are currencies.
Gold and silver bugs do not hate the dollar, the euro, the yen, or anything else. Gold and silver bugs hate the false weight and measure it represents because of it's stealth stealing printing masters.
Remember.....If you could ever control the issuance of currency or credit of the world, you would control the world. Now you know why bankers hate gold and silver. Choose wisely.
You just earned an AAA+ rating with that. Great job.
Gold is essentially a foreign currency, it's not a matter of "selling" it to buy dollars, although that may be necessary (taxes, for example).
The arguments follow a predictable meme, many are getting pretty shopworn by now.
"You can't eat it",
"it doesn't pay interest"
... and my personal favorite,
"it's heavy";
and the ubiquitous "What are you going to do, buy a loaf of bread with a one ounce gold coin?". The level of financial savvy has really slipped lately, jeez.
to preserve purchasing power is what I've been told. lots of stuff will be priced lower anyway like stocks suburban housing, used autos may actually appreciate due to new ones being completely unaffordable for most people. until the automakers bring production back to the U S to take advantage of the third world labor and lax environment laws. some soverign weath funds may make an offer for california or iowa possibly sine they will have all the gold then.
used autos may actually appreciate
No need to wait....................they already are, and have been bringing TOP dollar,Dealers are begging for them.
Even paying over Wholesale.
WHY?..............................................Oscummas Crush Plan, plan, and destruction of the entire vehicles.
When he bailed out GM.
I saw $40,000 vehicles with less than 30-50k miles demolished.
Sickening...............all the decent used cars are in SUPER short supply, and are bringing BIG prems.
O>T>, sorry, but thought it of import.
WONDER if this will create some stir???,
http://www.breitbart.com/Big-Government/2012/05/17/The-Vetting-Barack-Obama-Literary-Agent-1991-Born-in-Kenya-Raised-Indonesia-Hawaii
As per the Const, and additions...........
http://www.usconstitution.net/consttop_citi.html
We have a POTUS not qualified to be in office.(IF I read this correctly).
Why is it this turns up 4yrs AFTER??????????????????
WHY? A complicit liberal media?
The press was given special rights and dispensations in the constitution so that they would be free to pursue the truth wherever they may find it
They have failed and are now liberal social engineers forwarding and enabling their chosen candidates.
"When I am king they will be first against the wall" - Thom Yorke
I'm calling David Kotok first thing in the morning.
Tell David Ookspay says hi! I will see him up in Maine at the annual fishing trip. Do you need his cell?