Treasury Curve Pancaking As Stocks Approach 1252 Support

Tyler Durden's picture

The worst possible news for financials, which basically never managed to tick higher in all of 2011, is now here as the entire Treasury curve has virtually pancaked today, making sure that the perfect storm for banks is here, with nobody trading (no sales revenue), prop trading dismantled (no trading revenue), and no lending revenue soon either (2s10s heading to 0%). The closed loop will send even more money into the 10 and 30 Year, causing even more pain for banks, and so on ad inf until Bernanke relents. And you can be certain that the CEOs of the TBTFs are on the phone with the New York Fed as we speak. Luckily, the next FOMC meeting is August 9 which means the market will only have to deal with this non QE3 uncertainty for a few days. Naturally when QE3 is announced, gold will promptly leave $2000 in the rearview mirror.

And elsewhere, with the 200DMA support now history, the next support line, as we mentioned last week, is roughly 1252 which is now just 12 points away. After that... there is no support until about 1150.

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Archimedes's picture

Bernanke must be in a corner wetting himself. He knows he is now trapped. QE3 wont do anything except push oil to $120-140 a barrel and gas to 5 dollars a gallon. Gas above 4.25 kills the economy it 30 days.

Then the masses will truly be screaming for his head. It is gonna be a very interesting next couple of months.

Caviar Emptor's picture

See I think he's cool as a cucumber. All he needs to do is support the WS and international banking cartel. That's the one mission. All else is BS

KickIce's picture

Agree, the only time he might break a sweat is the few times he has to address the public.  He doesn't even flinch when he has to address congress as he already has them by the balls.

trillion_dollar_deficit's picture

I'm sitting on locking in my new mortgage rate with the 10 yr yield collapsing like it is. The question is though - how low will it go?

Yen Cross's picture

  Fixed rates come to mind?  Or rent your Guest House to the Secret Service....>

baby_BLYTHE's picture

Let's see the house pass this:

Rep. Paul introduces bill to cancel $1.6T in debt held by Federal Reserve

Rep. Ron Paul on Monday introduced legislation that would lower the federal government’s debt by canceling the roughly $1.6 trillion in debt held by the Federal Reserve.

Paul has argued for the last few weeks that the idea represents a quick way to make the growing fiscal crisis more manageable. Under his bill, H.R. 2768, the $1.6 trillion that the Treasury owes to the Federal Reserve would disappear.

Yen Cross's picture

  That was a rational comment...    I'm long the carry Trade/

erik's picture

talk about a positive feedback cycle.  Fed buys treasuries via QE, then Congress cancels Treasury debt to Fed, and repeat.  all the while, the banks continue to reap huge profits on buying treasuries first, then off-loading them to the Fed.

doesn't Ron Paul realize this bill enables the Fed and other big banks?  his only angle is trying to lower the money supply, but the Fed would just do another QE.

baby_BLYTHE's picture

perhaps, but me thinks this is a simple exercise by Dr. Paul to expose the FED's illegitimacy, send a message to the rest of congress after they voted to raise the debt ceiling.

As he has always said, there is no reason to cut healthcare for young children and the elderly, rather go after the FED and the overstretched empire.

erik's picture

it would certainly be an interesting twist.  i can't quite wrap my mind around all the possible repercussions.

thanks for posting the link.

KickIce's picture

If your kid can't ride without training wheels you have to put them back on.  Or is it more like the unstable 35 year old that will never leave home because he gets everything for free?

Typical DC, the fix just requires more money.

StychoKiller's picture

"The Politicians say, 'Mo' taxes will solve ev'rythang!'", "Ball of Confusion" by the Temptations

SITruth's picture

Back in the Great Depression, the banksters decided to throw in the towel and short their own banks stock and made millions.

Maybe thats what Dimon, Blankfein, and the rest are starting to think about right about now.

Buckaroo Banzai's picture

rest assured, when the time is right, that's what they'll do.

The short interest in Lehman right before it collapsed was EPIC.

Superslam's picture

Dow, S&P and oil are all testing ascending supportive trendlines started in March 2009 when the equities/commodities bull markets commenced. These current levels have to hold or it's look out below.

Bansters-in-my- feces's picture


I love when a plan comes together.

Yen Cross's picture

We have (a a) Zloty trade  1: minus 50:

Sutton's picture

Millions of people  sacrificed for the...Yield Curve.

Caviar Emptor's picture

I think he'll expand the balance sheet and do the QE3. It'll be soft peddled. But he made it plain during Humphrey Hawkins: The Fed stands ready. (Warming up the presses...vroom vroom)

stormsailor's picture

it broke above a trendline from 10am, i'm out. i was short 20 from 1289.

feels good to get some back i lost in 09. gloat,gloat.

Brokenarrow's picture

ZH is an awesome site. The research is impecable. Tyler is a most sopgisticated dude.

But, in the last two years you would have lost a boatload using the reseach on this site....respectfully.

and, where is pomo, momo, jomo, and homo today? These proped up the market before? Why not today?

the fed turned into a seller? uh? it is a conspiracy to float qe3? uh?

it seems like......i dunno

franzpick's picture

Come in Houston.  We have a problem with 6 months horizontal chart support failure on all ax-ees.  Please advise.

stormsailor's picture

looks like we're close to gimbal lock.

looks like i'm out to soon.  oh well, i'll sacrifice for the greater good, lol

stormsailor's picture

1253.50, looking like a good chance of a close below, this last 15 minutes should be interesting

Buck Johnson's picture

QE3 is coming, they have been talking more about it in the media.

chinawholesaler's picture

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