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T-30 Days To 10Y Treasuries Yielding Less Than 1%

Tyler Durden's picture


While many have discussed the extreme analogs of the last few years in equity market performance, few have looked at the relative performance of the most explicitly impacted asset class of Central Bank largesse - the US Treasury bond market. Based on the almost perfect correlation between 2010, 2011, and this year's yield movements over the past few months, traders could be forgiven for considering that the 10-year yield will be below 1% by the end of August - no matter how many times they are told  "but rates cannot fall any more" or this time it's different. One has to wonder just how long the Fed can control this herding of cats (by forcing everyone to front-run it) and what the hyper-inflating solution to asset-deflation expectations will look like this time.

Absolute performance of 10Y Treasury yields for each of the last 3 years...


Charts: Bloomberg


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Sun, 07/22/2012 - 19:00 | 2641133 SHEEPFUKKER

This shit is beyond stupid. 

Sun, 07/22/2012 - 19:19 | 2641166 ghengis86
ghengis86's picture

You know it's bad when the guy fucking sheep thinks your debt instrument is retarded

Sun, 07/22/2012 - 19:48 | 2641208 knukles
knukles's picture

Butchakno, ya just gotta love it.
Where else do the IMF and Greece both try to throw the other out of the house, screaming and yelling, throwing china and slamming doors, threatening to kill one another in their sleep, scaring the holy shit out of the neighbors, acting like Italian Gypsies and still, you can buy 10 years yielding more than 1%.


There's a prize in every box.
Except my Cheetos.


Munis, long treasuries and bullion, bitchez

Sun, 07/22/2012 - 21:17 | 2641438 economics9698
economics9698's picture

I think I will stock up on ammo and food and pass on the bubble.

Mon, 07/23/2012 - 02:08 | 2641676 redpill
redpill's picture

Bonds are not bonds anymore, now they are just currency for pull.  Term, yield, doesn't matter.

“When you see that trading is done, not by consent, but by compulsion - when you see that in order to produce, you need to obtain permission from men who produce nothing – when you see that money is flowing to those who deal, not in goods, but in favors – when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you – when you see corruption being rewarded and honesty becoming a self-sacrifice – you may know that your society is doomed.”


Mon, 07/23/2012 - 06:06 | 2641777 Disenchanted
Disenchanted's picture

  Tulip Bulbs

  U.S. Treasuries/bonds

Mon, 07/23/2012 - 08:23 | 2641959 FEDbuster
FEDbuster's picture

You can eat Tulip Bulbs.

Sun, 07/22/2012 - 21:17 | 2641441 Popo
Popo's picture

How many times have you heard Bernanke talk about the Great Depression?

Now ask yourself: How many times have you heard him talk about Weimar Germany?

We are so fucked.

Sun, 07/22/2012 - 21:24 | 2641454 economics9698
economics9698's picture

Freidman really performed a mind fuck on that boy.

Sun, 07/22/2012 - 21:54 | 2641483 nmewn
nmewn's picture

(Humping debt monetarist legs everywhere)

lol...suppose there was a hyperinflationary event and the people didn't participate?

You're a dentist who likes omelets for breakfast, I got a bum tooth and have chickens...did my bum tooth get in the way of actual commerce & credit as we know it today or did the egg come first?

Fucking eggheads, ya gotta love em ;-)


Sun, 07/22/2012 - 22:48 | 2641543 jeff montanye
jeff montanye's picture

well yields on the solvent eu government debt is currently negative so one might be cautious about saying "never" with regard to lower u.s. tsy yields.

for some real insight:

Sun, 07/22/2012 - 23:25 | 2641591 nmewn
nmewn's picture

I didn't know the EU had any solvency at countries by themselves, yes.

Having said that, I have always respected Hussman's opinion.

Sun, 07/22/2012 - 23:09 | 2641567 knukles
knukles's picture

Actually Uncle Milton is spinning over in his grave at The Bernak's, who by the way is a fucking Keynesian (with next to no respect for monetarism of the Old School nee Freidman and Schwartz) who specialized in the study of the Great Depression.
Please, the Bernak is just about as far removed from classical monetarism as he is from the Austrian school.
Uncle Milty would never, ever have suggested flooding the banking system as has been done to wit; unnecessary liquidity as evidenced by excess reserves.
Nor would Milt concur with the Kelptocratic marriage between Gubamint and Big Funance in any way, shape or form as it's antithetical to classical free market philosophy (as should, would or could have ever been imagined) close to that imagined by the likes of Von Mises, et al ref: Notes and Recollections, 1978, Libertarian Press, amongst others.

Mon, 07/23/2012 - 00:01 | 2641613 nmewn
nmewn's picture

Spot on.

To say, that Friedman, who actually despised the Fed as an entity of control of the nations money supply would approve of the expotential "creation" of money as a salve, a bandage, to the wound of financial malfeseance by pols & their cronies, is to misunderstand what population growth and money supply is.

Money creation is not or should not be the domain of banks. It is not there to save or protect banks. Its to conduct commerce. Commerce doesn't need banks.

Damned pollyansih Fabians...

Mon, 07/23/2012 - 00:35 | 2641633 Socialized Losses
Socialized Losses's picture

ahh grasshopper clever insight +1

Sun, 07/22/2012 - 19:21 | 2641167 BandGap
BandGap's picture

There was a time I thought I could fucking retire at 54. Part of my stupid fucking plan was getting a yield of 4-6% on bonds at this point (plan made 12 years ago). I can find a job pretty easily due to my skill set, but this working past 62 is pure crap. Fuck, fuck, fuck.

Sun, 07/22/2012 - 19:22 | 2641170 fonzannoon
fonzannoon's picture

There was a time I thought I could fucking retire....

Sun, 07/22/2012 - 19:27 | 2641180 JLee2027
JLee2027's picture

Buy and hold mucho Silver young man...simple as that.

Sun, 07/22/2012 - 19:51 | 2641217 BandGap
BandGap's picture

I do. I also have 500 50 mg sudenifil citrate tablets as barter.

Sun, 07/22/2012 - 22:05 | 2641499 nmewn
nmewn's picture

You planned to retire?

Remember, you didn't build any of that, someone else did that for you, its theirs ;-)

Sun, 07/22/2012 - 22:08 | 2641503 mcguire
mcguire's picture

barter viagra? thats your plan???

not bad, actually.. 

Sun, 07/22/2012 - 22:48 | 2641544 BandGap
BandGap's picture

Think about it, really. There is no broader appeal and no cheaper form of drug/entertainment. They don't bribe fringe Taliban leaders with money, BTW. They use the blue persuasion.

Sun, 07/22/2012 - 23:15 | 2641579 flacon
flacon's picture

Go long suicide pills. ... or long high bridges and rope. 

Sun, 07/22/2012 - 23:17 | 2641581 flacon
flacon's picture

Sorry... just being morbid, but I can't see the baby boomers, M*A*S*H / Gilligan's Island watchers wanting to survive what is coming.... 

Mon, 07/23/2012 - 00:29 | 2641631 HD
HD's picture

The M*A*S*H theme song was "Suicide is Painless"...

Sun, 07/22/2012 - 19:46 | 2641204 disabledvet
disabledvet's picture

There was a time I thought I could phuck. What was the question again?

Sun, 07/22/2012 - 21:23 | 2641451 economics9698
economics9698's picture

When will you retire?  For me I would rather gang bang in my old age I always like kos.

Sun, 07/22/2012 - 20:46 | 2641386 ljag
ljag's picture

In 1998, I re-entered the world 40k in debt. I worked as a plumber until I finally started my own biz but still never made more than 60k per yr. I retired last year and bought my retirement home for cash. I bot monster boxes when they were 15k.......end of story.

Sun, 07/22/2012 - 19:47 | 2641210 q99x2
Sun, 07/22/2012 - 23:06 | 2641565 lasvegaspersona
lasvegaspersona's picture

CM is a lovely old city and I plan to return soon...what brought it up in this discussion?

Mon, 07/23/2012 - 05:07 | 2641756 GlobalCtzn
GlobalCtzn's picture

Shhhhhhhhhhhhhhhhhhhhh...........................keep it quiet.

Sun, 07/22/2012 - 19:38 | 2641192 Big Slick
Big Slick's picture

Bernanke's 100-round drum magazine is about 10 seconds from jamming.

(too soon?)



Sun, 07/22/2012 - 21:39 | 2641471 Clueless Economist
Clueless Economist's picture


Sun, 07/22/2012 - 23:31 | 2641583 flacon
flacon's picture

Phully Automatic? What's that you say?

Sun, 07/22/2012 - 19:07 | 2641137 JustObserving
JustObserving's picture

T-30 days for US debt to exceed $16 trillion and US unfunded liabilities to exceed $120.3 trillion.  That should go well with under 1% ten year yields.

When markets are manipulated, they don't make sense.  Gold should be skyrocketing but it will be held down.

Sun, 07/22/2012 - 20:05 | 2641238 icanhasbailout
icanhasbailout's picture

once yields are driven sufficiently negative, we're going to borrow ourselves into solvency

Sun, 07/22/2012 - 22:38 | 2641527 Freebird
Freebird's picture

Shhh...another tree just fell

Sun, 07/22/2012 - 22:36 | 2641531 Freebird
Freebird's picture

Someone say Exter's Pyramid...thought so

Sun, 07/22/2012 - 20:30 | 2641337 DeadFred
DeadFred's picture

Two weeks more

Sun, 07/22/2012 - 19:06 | 2641141 RobotTrader
RobotTrader's picture

Hands down, owning U.S. "Paper" has been the greatest wealth building decision ever made the last 35-years.


No other asset class in world history has had a bull market that has lasted this long.

The Chinese, Japanese, U.K., etc. must be relishing in the fantastic gains they have made by dollar cost averaging, month in, month out for 30+ years and right now 100% of their purchases are currently in a winning position, even the panic buyers during the 2008 financial crisis have healthy profits now.

With the U.S. Dollar surging to boot.

Sun, 07/22/2012 - 19:09 | 2641147 fonzannoon
fonzannoon's picture

and it will end in spectacular fashion

Sun, 07/22/2012 - 19:16 | 2641155 AUD
AUD's picture

You evidently haven't seen a graph of the US $ gold price going back 35 years. Nor do you seem to realise that you are measuring your wealth building against the same thing you are saying is building your wealth.

You'll be like those starving billionaires in Zimbabwe.

Sun, 07/22/2012 - 19:47 | 2641207 HoofHearted
HoofHearted's picture

I did swtich my 403b over to bonds about nine months ago. While everyone else bitches about their balance going down, my balance has actually gone up. But I feel a helluva lot better about the previous 403b that I cashed out, taking the penalty. Back in 2009 all that went into silver with a little gold to go along. We're doing ok on that too. Theere are exactly as many ounces now as there were when I bought them...

Sun, 07/22/2012 - 19:53 | 2641221 AUD
AUD's picture

Nor do you seem to realise that you are measuring your wealth building against the same thing you are saying is building your wealth.

Sun, 07/22/2012 - 19:58 | 2641227 fonzannoon
fonzannoon's picture

AUD it parallels the idea of a goldfish having a 3 second memory

"This is a nice bowl. It's kind of small...holy shit I think I am stuck in here....HEY HEY!! GET ME OUTTA HERE!!...This is a nice bowl..."


Sun, 07/22/2012 - 20:33 | 2641352 DeadFred
DeadFred's picture

4 second memories are totally overrated

Sun, 07/22/2012 - 19:16 | 2641161 AC_Doctor
AC_Doctor's picture

US paper, the next mega-bubble to pop and it will be the greatest wealth-destroyer in current times. Backed by the full 16 trillion dollar US debt and
empty vaults in Fort Knox that once contained 8000 tons of gold bullion. Robotard, your Lululemon body tights are cutting off circulation to your cranium again...

Sun, 07/22/2012 - 19:27 | 2641179 fonzannoon
fonzannoon's picture

Can't you picture what Robot's posts would be like in 2000 when the Nasdaq hit 5k?

"Tech stocks are killing it again. Anyone looking to short at these all time high's are gonna learn you don't fight this trend. Tech is the future. AOL and Lucent are the future. Redhat too. Look at gold sitting at all time low's. I bet some suckers try to go long here and get stuck selling this dead money trade in a week"

 - March 10 2000

(My best guess)

Sun, 07/22/2012 - 19:43 | 2641199 The Swedish Chef
The Swedish Chef's picture

I wish I could give you more than just a measly green arrow for this post. 

Sun, 07/22/2012 - 22:17 | 2641510 derek_vineyard
derek_vineyard's picture

robotrader was born in 2000

Sun, 07/22/2012 - 19:25 | 2641174 The Swedish Chef
The Swedish Chef's picture

Yeah, Bernanke is fucking genius buying up all those QE bonds. If the Fed was a private corporation he wou...wait, it is. 



Sun, 07/22/2012 - 21:10 | 2641425 FEDbuster
FEDbuster's picture

With the ability to counterfeit.

Sun, 07/22/2012 - 19:47 | 2641211 bigkahuna
bigkahuna's picture

TROLL! There, I said it.

Mon, 07/23/2012 - 00:55 | 2641641 Mine Is Bigger
Mine Is Bigger's picture

Somehow, I don't think the Japanese U.S.-paper horders are patting their backs for their "greatest wealth building decision."

The U.S. dollar has lost nearly 80% of its value against the yen over the last 35 years.

Sun, 07/22/2012 - 19:08 | 2641145 lolmao500
lolmao500's picture

Free market is for commies!

Sun, 07/22/2012 - 19:10 | 2641151 RobotTrader
RobotTrader's picture

The guys running the high-yield muni-bond ETF's like HYD are going to be using even more insane leverage to "juice their returns" with this huge blowoff in fixed income coming next week.


The smart guys will start scaling out and taking their profits and put them into stocks.

Sun, 07/22/2012 - 19:29 | 2641182 francis_sawyer
francis_sawyer's picture

if they happen to wait until the following Monday, maybe you can frontrun them with your allowance money on Friday...

Mon, 07/23/2012 - 00:54 | 2641639 RockyRacoon
RockyRacoon's picture

Now I remember who you remind me of:  Johnny Bravo (aka MasterBates).   The only difference is that he was blathering on about gold.   Poor fella, I think he ended it all by jumping out of his dorm window.   Ah, those were the good old days.

Sun, 07/22/2012 - 19:10 | 2641152 ZeroPower
ZeroPower's picture

History doesn't always repeat itself - but it often rhimes. 1% doesn't seem far-fetched, despite the early shorters out in full force.

My firm has a longer term (1H2013) target of 1% for the 10 year, i.e we might see some stability after the election in November.

Sun, 07/22/2012 - 20:37 | 2641368 DeadFred
DeadFred's picture

Bookmark your post so you can visit it again in say March to get a real belly laugh.

Sun, 07/22/2012 - 23:16 | 2641578 ihedgemyhedges
ihedgemyhedges's picture

Who gives a rat's ass about your firm's target for the 10 year?!?!  What I want to know is do they have a policy that prevents you from removing that flag hiding the two hot chicks in your avatar??????

Sun, 07/22/2012 - 23:37 | 2641599 flacon
flacon's picture

Good time to buy the VXX / UVXY? Or perhaps buy call options? What do you think?

Mon, 07/23/2012 - 00:55 | 2641643 RockyRacoon
RockyRacoon's picture

I think you'd better beware of the steamroller bearing down on you.

Mon, 07/23/2012 - 05:09 | 2641758 Doubleguns
Doubleguns's picture

Plenty of problem.

Sun, 07/22/2012 - 19:15 | 2641159 chump666
chump666's picture

Asia is going to f*ck with the curve now and force interest rates up.  Now that inflation is sweeping through the middle east, India, China and now America (droughts).  So if the sicko's at the ECB and Fed start their re-inflation trade madness expect huge USD bids (from Asia/India) and 30yr selling and 10yr buying. 

Very interesting markets now, with Asia (which are the paymasters, creditors of the world) now forcing the West to tightening up.  The party is truly over.  Stock bulls, sorry, you are going to have to deal with a juicy sell off that may last months.


Sun, 07/22/2012 - 19:43 | 2641198 fonzannoon
fonzannoon's picture

Can someone just for shits and giggles humor Robo for a second and walk him through a scenario where the treasury trade unwinds and those trillions go piling into Home Depot and Lulu?  Interest rates would spike up and the fed would blow up and the banks right alongside them, which would result in a spectacular market crash.

Thats my guess, any one else?

Sun, 07/22/2012 - 20:58 | 2641388 chump666
chump666's picture

I don't know what robo is smoking but whatever it is it's the same sh*t that Market-watch smoke, sans Farrell, he's knocking back Tequila shots...which is cool with me.

But seriously, Asia sells equities and buys USDs and plays around with the UST curve it will stop bull runs in their tracks, anyone hoping for the Dow 15000 will be living in a cardboard box eating rats. 

Mon, 07/23/2012 - 00:58 | 2641646 RockyRacoon
RockyRacoon's picture

Properly prepared, rats can be quite tasty.  That's all a squirrel is anyhow.  A rat with a furry tail.  You should keep them caged and fed on decent food for about a week so the alley toxins get cleaned out first.

Mon, 07/23/2012 - 01:26 | 2641667 chump666
chump666's picture

Yeah, if you gotta eat.

Mon, 07/23/2012 - 05:12 | 2641759 Doubleguns
Doubleguns's picture

Someone should rape Robo's avatar. That might shut him up.

Wed, 07/25/2012 - 19:27 | 2651314 RockyRacoon
RockyRacoon's picture

Rape?  A raccoon?  Boy, you're one sick.....

Sun, 07/22/2012 - 19:57 | 2641226 disabledvet
disabledvet's picture

I think this is a very interesting view. Funny that this is article is posted as well because after explaining to The Old Man what Zero Hedge is for the upteenth time his "question for the site" was what the Tylers' Durden figured would happen should interest rates at the long end would should the yield go up ten fold with a commensurate decline in the value of the principle. There was a debate whether the interest rate expense would be 1.2 trillion or 12 trillion per year actually. Currently even with the "at or near zero" rate it's still a massive Federal Program. If we get a "blow off" that would mean the interest would BE the government of course...

Sun, 07/22/2012 - 19:15 | 2641160 Hype Alert
Hype Alert's picture

It works until it doesn't.  Then, you're on your own.

Sun, 07/22/2012 - 19:24 | 2641173 emersonreturn
emersonreturn's picture

and oil?  will TPTB be able to keep it low until after the election?

Sun, 07/22/2012 - 19:37 | 2641193 CrashisOptimistic
CrashisOptimistic's picture

Your post typifies the New Normal.

You think $106 Brent is low. Or $91 WTI.

Sun, 07/22/2012 - 19:29 | 2641183 Reese Bobby
Reese Bobby's picture

If the 10YR yield declines to 1% it is only a +4.2% price increase.  Heck, a .5% yield is still less than a +10% price move.  It almost makes one wonder if the yield curve is being manipulated in some way!  Go Bernank, go...

Sun, 07/22/2012 - 19:32 | 2641186 babylon15
babylon15's picture

Total World Debt 2007: 29 trillion

Total World Debt 2012: 45 trillion (+16 trillion)

Total Central Bank Balance Sheets 2007: 5 trillion
Total Central Bank Balance Sheets 2012: 16 trillion (+11 trillion)


11/16 = 68.75 cents of every 100 cents of debt created in the last 5 years was bought by a central bank with leverage (ECB: 37 to 1.  Japan: 50 to 1.  USA: 54 to 1.)



Sun, 07/22/2012 - 21:14 | 2641435 FEDbuster
FEDbuster's picture

Where's all the MONEY?!?!

Got Gold?

Sun, 07/22/2012 - 19:32 | 2641187 Lost Wages
Lost Wages's picture

Why are they not already negative? NIRP is da bomb.

Sun, 07/22/2012 - 19:55 | 2641224 q99x2
q99x2's picture

From CNBC: 'The euro zone is not in danger of breaking up despite some analysts' worse case scenarios, European Central Bank President Mario Draghi said, judging that the bloc was inevitably marching towards closer union among its members.'

Arrest him!

Sun, 07/22/2012 - 20:00 | 2641232 Snakeeyes
Snakeeyes's picture

My chart of the 10 year shows the same scary trend while Spain rises in the same way.

Sun, 07/22/2012 - 20:10 | 2641244 RobotTrader
RobotTrader's picture

Gold really starting to eat dirt right now as the AUD plunges along with all the commodity plays.

Can't wait to see the spectacular crash in the grains.

Sun, 07/22/2012 - 20:14 | 2641249 dolph9
dolph9's picture

You certainly are one of the most effective and persistent trolls I've ever seen.

Sun, 07/22/2012 - 21:37 | 2641470 knowless
knowless's picture

ZH's RT was in remission for awhile now, I'm not quite sure what environmental factors facilitated its return..

Mon, 07/23/2012 - 01:01 | 2641651 RockyRacoon
RockyRacoon's picture

It's obvious to me that he's scared shitless.   Some people babble on and on when nervous and agitated.

Sun, 07/22/2012 - 20:23 | 2641314 Mr_Wonderful
Mr_Wonderful's picture

Well, corn went from 300 to almost 800 from mid 2007 to mid 2008 and was back at 300 a few months later.

Sun, 07/22/2012 - 21:25 | 2641457 GOSPLAN HERO
GOSPLAN HERO's picture

There is too much THC in your bong water.

Sun, 07/22/2012 - 22:03 | 2641497 Al Huxley
Al Huxley's picture

Ah yes, really getting 'blowtorched' - why, it's down .25%. Of course, until Asia finally decides to take over and make the price instead of taking, what happens outside of NY hours doesn't mean shit one way or the other, but still - very astute observation.

Sun, 07/22/2012 - 20:18 | 2641274 Kreditanstalt
Kreditanstalt's picture

So why does ZH seem permanently perplexed at the levitating stock market?


In a world of 1% (or less) returns, for everyone from mom'n'pop to CALPERS, big-name stock dividends are very attractive to any entity DESPERATE for cash flow.  Funds, hedgies, insurers, pension plans are no doubt ALL IN, and will be until these ridiculous and (longer-term) unsustainable dividends are cut.

Then there will be a rush for the doors and anyone caught still holding the hot AAPL (etc.) potato will suffer enormous capital losses (not to be marked-to-market OF COURSE...) PLUS much-reduced dividend payouts.

Look out on the way down...

Sun, 07/22/2012 - 22:03 | 2641498 knowless
knowless's picture

rush to any return, but price to earnings right? weren't there some big earnings misses recently? how can a company promise any kind of dividends if there is persistent unemployment? besides "targeted" inflation? play the game if you want, but you might as well buy scratch-it's, be sure to boast about your returns though if you win, right before they can't buy you your mcfoodsubstitute.


for the average (employed american) person, who resents their commute, i'm pretty sure we're already in solidly negative territory. the "misallocated capital" is apparent in discrepancies between housing and available jobs, the neighborhoods around old shipping, agricultural, or industrial centers are filled with mcmansions or over priced luxury condos, and the walkable/bikeable (poor(gentrified)) neighborhoods have no jobs of any merit(service industry compounds the problem), as zoning laws have pushed housing which would be affordable for those who work productive jobs out of the core in favor of retail and entertainment. a pointless and infuriating inversion (lol obesity).


the mismatch of population densities as they relate to class has caused systemic failings in future planning.


why am i not payed enough to be able to walk to work?

Mon, 07/23/2012 - 01:06 | 2641655 RockyRacoon
RockyRacoon's picture

Companies are cannibalizing the future to buy "performance" today.  This situation will continue until it can't.  Those dividends and buy-backs should be going into R&D and expansion, but that would mean a lean quarter or two.  Can't have that now, can we?  One must look good -- at all costs.

Sun, 07/22/2012 - 20:53 | 2641392 lieutenantjohnchard
lieutenantjohnchard's picture

wonder what rates would be if the fed hadn't bought half of the treasury's bond issuance since 2011?

Sun, 07/22/2012 - 21:20 | 2641447 surf0766
surf0766's picture

Even if mortgage rates go to 0 I am not moving. Get over it. Housing is returning to what it should be. A place to eat , sleep, and be safe and not something that some butthead can flip for 50K in profits without and construction experience.

Mon, 07/23/2012 - 01:11 | 2641657 RockyRacoon
RockyRacoon's picture

That's some funny stuff.  I was in the remodeling business for 30 years.   Those property flipping TV shows were like watching a sitcom for me.   Some stupid sonsabitches out there got their asses handed to 'em, and a few stumbled into profits just because the expanding market bailed them out.   Just plain goofy.   I'll miss those shows.   Wonder kin I get 'em on DVD for a walk down memory lane? 

Sun, 07/22/2012 - 21:25 | 2641456 Downtoolong
Downtoolong's picture

Nothing looks more like the housing bubble and the dot com bubble to me right now than longer duration Treasuries. Everyone is buying into hot air and it clearly can’t sustain lift if you believe anything about true fundamental economics. Sure rates could go lower, but, that only means they will swing wider to the upside when it finally reverses. In the long run, that’s all a bad thing. So, who, what, when, where, why we don’t know. All we know is that it will eventually collapse. That’s why I’m getting out slowly but surely now. Just once before I die I want to front run my trust in the central banking system and my own stupid complacency.

Sun, 07/22/2012 - 22:48 | 2641545 Kreditanstalt
Kreditanstalt's picture

Treasuries will go for many years yet.

If you were a foreign central bank, flush with dollars derived from exporting to the US, what could you buy with them?  Not a lot: real estate maybe, gold (market too small), other currencies (same problem) - commodities likely...but you're going to accumulate ever more of the currency and there are precious few things to buy with them... least long Tresuries pay SOMETHING, unlike bonds of Denmark, Germany,Finland...with NO risk as in other asset you can flip them for a quick frequent small profit to the FED (public)...

Mon, 07/23/2012 - 01:13 | 2641660 RockyRacoon
RockyRacoon's picture

What part of "T-30 Days To 10Y Treasuries Yielding Less Than 1%" did you not see?  I respect your comments, but that's not what I call a "return".

Mon, 07/23/2012 - 02:23 | 2641687 The Swedish Chef
The Swedish Chef's picture

No risk? An entity with almost 16 trillion in debt poses no risk? 


Up until 2010 Greek bonds were risk free. Hey, tripple A European bonds, what could go wrong? Go all in.

Mon, 07/23/2012 - 02:47 | 2641696 Kreditanstalt
Kreditanstalt's picture

You're not thinking like mainstream fund managers!  Hint: Think: LEMMING.

They have fundholders to pay - in cash.  They have unitholders, pensioners, benefit collectors, investors, retirees, their staff costs, interest on their leveraged borrowings...all in CASH.  They can't speculate.  Ergo, no gold, no commodities, no oil, no non-dividend-paying stocks, no real estate unless it pays rent.  They're also limited by their silly prospectus and government rules to Tier one asset classes, triple-'A' stuff according to the laughable ratings agencies.  That means only highest rated BONDS.

So ANY return is what they're after.  They have NO IDEA what "return OF your capital" means versus "return ON your capital" ~ they only understand the latter.  Cash flow, cash flow, cash flow.   Which is why this will go on all the way to zero or crisis for years yet...

Funniest of all is that institutional expectations are STILL predicated on @8%p.a. returns!

Mon, 07/23/2012 - 10:24 | 2642422 RockyRacoon
RockyRacoon's picture

"You're not thinking like mainstream fund managers!"    Thank you for that.  

Lest you misunderstand me, that would constitute a compliment.

Sun, 07/22/2012 - 21:55 | 2641484 RobotTrader
RobotTrader's picture

10-yr. yield at world record lows, just made the front page of Drudge Report

Sun, 07/22/2012 - 22:11 | 2641508 Al Huxley
Al Huxley's picture

Gee, if it wasn't such a high quality asset (being backed by the full faith and credit of the US govt and all) you might almost think there was getting to be a bubble in US debt - like people had forgotten about fundamentals, or even shit like 'safe haven status' and secure yield, and were just going in for capital appreciation ala tech stocks in 1999-2000 or housing up to 2007  (sure, -2% isn't great, but wait til I sell my 100x leveraged position to the next sucker for -3% ).

Sun, 07/22/2012 - 22:55 | 2641552 Mr_Wonderful
Mr_Wonderful's picture

Since interest rates reflect the value that the economy places on time, obviously the bond market is telling us that the economic slump will extend for years and years. As a result most people have gradually tired of going into debt to chase falling prices and are instead conserving cash in anticipation of falling prices.

U.S. govt. bonds are backed by the taxability of Americans, among other things. It´s an extremely safe parking place for cash and that is unlikely to change in the next several years. If you check the 10 yr you will see a remarkably exact trading channel from 1985 or so heading to a yield of 0% in maybe two years or so.

Mon, 07/23/2012 - 01:16 | 2641662 RockyRacoon
RockyRacoon's picture

"U.S. govt. bonds are backed by the taxability of Americans..."

Don't forget the drones.   The U. S. is big in that area.   Taxation is one thing, but being able to kick ass is another.

I'm still mulling over whether I want to be a part in that approach to stability of the currency.

Mon, 07/23/2012 - 05:07 | 2641755 Mr_Wonderful
Mr_Wonderful's picture

Absolutely. They´re backed by U.S. military might, highly diversified economy and extremely diverse and liquid U.S. financial market. But the main pillar is trust that U.S. taxpayers will eventually pay these debts. Or who knows, maybe in 2050 the chinese govt. will raise the value added tax rate by 1 percentage point to correct a shortfall in the U.S.

Mon, 07/23/2012 - 10:28 | 2642435 RockyRacoon
RockyRacoon's picture

My avatar aside, have you ever experienced a cornered coon?  They are vicious and quite talented at their form of warfare.   A cornered animal has nothing to lose.   The U. S. has fang and talon in abundance and can/will do considerable damage when up to the final wall.   It will not be pretty.

Sun, 07/22/2012 - 21:58 | 2641489 gookempucky
gookempucky's picture

like watching the house burn to the ground----------- In slow motion.

Sun, 07/22/2012 - 22:25 | 2641516 gookempucky
gookempucky's picture

Ten-year Treasury yields touched a record 1.4348 percent and were at 1.44 percent as of 9:33 a.m. in Tokyo, two basis points below the close on July 20. The 1.75 percent security due in May 2022 rose 1/8, or $1.25 per $1,000 face amount, to 102 26/32

watch muni and IIT yields crash---ohhhh  the pensions have plans.

Sun, 07/22/2012 - 22:41 | 2641536 gookempucky
gookempucky's picture

For those who are interested in the bond market-- AND YOU SHOULD BE----since it is the PONZI of all PONZZZiieeeesss.

Light bleeding in the IG-CBI index but volume is off by a whopping 37%

HY-CBI is bleeding as volume down by 34%

Lets not leave out the secondary corporate bond market--its a bloody mess


Sun, 07/22/2012 - 23:12 | 2641571 lasvegaspersona
lasvegaspersona's picture

a few months ago I decided to proclaim October 25, 2012 as Blackest smart ass answer to..."but when?".

Now I feel like some wide eyed optomist telliing eveyone to be calm...that everythng is fine. I just do not see how we make it to 2013 with an intact monetary system. Some teeny CDS or interest rate swap on the bhat could be the thing that does the other thing that causes the bank that owed this other bank....

Sun, 07/22/2012 - 23:16 | 2641580 savagegoose
savagegoose's picture

but demanding yield is a terrorist act

Mon, 07/23/2012 - 00:11 | 2641624 TyrannoSoros Wrecks
TyrannoSoros Wrecks's picture

It doesn't matter what the interest rate on our debt is because they have no intention of ever paying it back.

Mon, 07/23/2012 - 01:10 | 2641658 Mr_Wonderful
Mr_Wonderful's picture

Bonds trade at price and price and yield move in opposite directions. Since the price of govt. bonds is currently at a 200-year high after a very consistent 25 year long bull market, most bondholders are in the money and some big and long ones very handsomely so. Therefore yield isn´t presently a very big concern. The bull is likely to continue for a few years anyway. It´ll probably plateau around zero % yield. Of course there are always corrections but the very strong bull trend of the last 25 years is unlikely to reverse any time soon.

Mon, 07/23/2012 - 01:41 | 2641669 whaletail
whaletail's picture

Not gettin' it. NOWHERE near gettin' it. 

61% of treasuries were purchased by the Fed in 2011. 61! Then, you have this chart:

Your strategy is a very, very dangerous one when a much safer strategy exists. 

Mon, 07/23/2012 - 01:28 | 2641668 chump666
chump666's picture

The AUD WILL crash, but gold won't.  Their will be a massive safe haven trade if Spain blows up, which looks likely (no bailouts).  The ECB and Fed cannot print now due to raging inflation now hitting Asia etc.


Mon, 07/23/2012 - 02:21 | 2641685 Bastiat009
Bastiat009's picture

So, if I understand well, investors today (I am talking about the Goldmans, JP Morgans, Barclays and co) are selling gold and buying US Treasuries. Fascinating times.

Mon, 07/23/2012 - 03:24 | 2641712 chump666
chump666's picture

spains CDS 5yr blows out at 638 - a record! 



Mon, 07/23/2012 - 05:28 | 2641766 Mr_Wonderful
Mr_Wonderful's picture

Hmmmm, even Dubya almost appears semi-smart compared to this dumbbell:

Foreign Policy: Who do you think is the smartest, most penetrating thinker you know (maybe other than your own family)? Are there people who should be on our list?

Bill Clinton: Paul Krugman -- I don't always agree with him, but he is unfailingly good. David Brooks has been very good. Tom Friedman is our most gifted journalist at actually looking at what is happening in the world and figuring out its relevance to tomorrow and figuring out a clever way to say it that sticks in your mind-like "real men raise the gas tax." You know what I mean?

Mon, 07/23/2012 - 15:45 | 2643558 suz
suz's picture

We're in the theatre of the absurd, with "No Exit"

This is just beyond proportions. What were these guys thinking all these years?

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