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Treasury Yields Plunge To All-Time Record Lows Across The Curve

Tyler Durden's picture


While it seemed somewhat inevitable given the trend, the dismal reality from Europe has sent investors scurrying for the 'safety' of the US Treasuries overnight. The entire yield curve has fallen to all-time record lows with 10Y trading below 1.40% and 30Y below 2.48%. 7Y - the seeming cusp of Twist - is below 90bps now and 2Y below 20bps. The shortest-dated T-Bills still trade around 4-6bps (as opposed to the deeply negative rates in Switzerland and Germany this morning with FX risk premia expectations, and Twist+, affecting this differential). Not a good sign at all - and definitely not yield curve movements on the basis of renewed QE as we see stock futures plunging to the old new reality (as those pushing dividend yields as the 'obvious move here may note that since Friday's highs, you've lost half a year's dividend as equity capital has depreciated 2%). Perhaps the sub-1% 10Y we noted yesterday is not such a crazy idea after all...

30Y - record low yields...

10Y - record lows - intraday

and remember equities remain a considerable way from any kind of relative reality (QE or no QE) to bonds...

Chart: Bloomberg

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Mon, 07/23/2012 - 08:22 | 2641953 Aziz
Aziz's picture

Definitely not a bubble. 

Mon, 07/23/2012 - 08:26 | 2641970 Jim in MN
Jim in MN's picture



Right. The bubbles have stopped rising to the surface at this point.

Mon, 07/23/2012 - 08:36 | 2642013 Offthebeach
Offthebeach's picture


Bush's fault.

Now's a good time to buy.

Mon, 07/23/2012 - 09:01 | 2642103 DoChenRollingBearing
DoChenRollingBearing's picture

Lower rates means capital is getting destroyed.  New borrowers (few in number vs. borrowers in total) have a tremendous advantage.  This is a big distortion that destroys capital...

And of course hits savers hard.  What's next: 10-year bonds to 1.0%?  Ugh.

Mon, 07/23/2012 - 10:07 | 2642333 I am more equal...
I am more equal than others's picture

Bubbles in a drowning market. 

Mon, 07/23/2012 - 08:26 | 2641972 battle axe
battle axe's picture

Step right up and get paid negative yield by the US Govt for their bonds, Talk about a Ponzi scheme....Just watch, this is going to happen soon. 

Mon, 07/23/2012 - 08:37 | 2642017 SheepRevolution
SheepRevolution's picture

What savings?

Mon, 07/23/2012 - 08:22 | 2641956 fonzannoon
fonzannoon's picture

It's as if there was a European ship that sank slightly earlier than the Titanic and the the european life boats raced straight to it.

Mon, 07/23/2012 - 08:23 | 2641958 Mae Kadoodie
Mae Kadoodie's picture

Purple NiRPle.  Ouch.

Mon, 07/23/2012 - 08:25 | 2641966 Jim in MN
Jim in MN's picture



"the seeming cusp of Twist"


Very poetic.  Shakespearian.  Nice way to start another Freaky Monday. 

Mon, 07/23/2012 - 08:32 | 2641967 Temporalist
Temporalist's picture

Remember the bus bomber in Bulgaria?  That was so long ago.  Will he be on "Where are they now?" some day?


And in other seemingly less important news:

California Police Shoot at Women and Children in Protest




Mon, 07/23/2012 - 08:27 | 2641976 q99x2
q99x2's picture

Now that's a business model worth funding.

Pay me to take your money. The more you pay the less I give back.

Mon, 07/23/2012 - 08:27 | 2641978 BRAVO 7
BRAVO 7's picture

i interrupt your regular programming to bring you this vital message;

F.M. Riley (27 June 2012)
"Connecting the Dots"   Dot No. 2…….Some of our readers are familiar with the account of Rabbi Yitzhak Kaduri, the old Jewish Rabbi who passed from this life in 2006 at the age of 113.   This was the Jewish year of 5766.  Before his passing he claimed that in a dream the Messiah of Israel had come to him and revealed Himself to him.   He told the other Rabbis in Jerusalem and other parts of the world that he knew the Messiah personally for he had met Him in his dream, spoken with Him, and worshiped Him.  

     Rabbi Kaduri then said that he had left a letter to be opened after his death.  This letter would reveal the name of the Messiah and other important information which the Messiah had given to him.  The letter was left in the possession of his son, and if I remember correctly there was a designated time after his death when the letter was to be opened.  Anyway…..

     The letter was opened at the designated time and it was such a shock to the Rabbi’s son that he hesitated to reveal the contents of the letter, but finally did.  In the letter the old Rabbi stated


that the name of the Messiah of Israel was “Yeshua,” the One whom the Christians call “Jesus.”   That revelation was such a shock to the Rabbis in Jerusalem and other parts of the world that it  created an uproar among the Rabbis.   Remember that for 2,000 years the Rabbis of the Jewish people have lied about  the resurrection of the Lord Jesus Christ [Matthew 28:11-15], refused to believe on Him, and have done everything they knew to do to discredit Him in the eyes of their own Jewish people.   Remember also that the Lord God explicitly told the Jewish people centuries ago,   “As for My people, children are their oppressors, and women rule over them.  O My people, they which lead thee cause thee to err, and destroy the way of thy paths,” Isaiah 3:12. 

(this letter the old rabbi left for the world goes on to reveal the month and year that the lord jesus told him he would return. this same jesus,acts ch.2)

all you need to know,the simplicity of this salvation gospel,

mark ch.16:16

he that believeth and is baptized shall be saved. he that believeth not shall be damned. in red letters in the 1611 kjv. ) my commentary

http://www.fivedoves.com/letters/june2012/fmriley627.htm   the rest at this site.

Mon, 07/23/2012 - 09:59 | 2642301 mcguire
mcguire's picture

Dot no. 1:  If you are going to prostelatize on zerohedge, please make your comments topical to the thread in question... 



Mon, 07/23/2012 - 08:29 | 2641982 Ted Baker
Ted Baker's picture


Mon, 07/23/2012 - 08:29 | 2641983 Dr. Engali
Dr. Engali's picture

Let me see. I loan the government my money for ten years and I get 1.4% return, but actual inflation is around 7%. It sure doesn't seem like a very good deal for me.

Mon, 07/23/2012 - 08:33 | 2642002 Kreditanstalt
Kreditanstalt's picture

The characters buying Treasuries are yield-desperate: they crave anything that gives off cash, however little.  They can't speculate in gold, commodities, oil, real estate or anything at all that doesn't pay out $.  Thus this will go until a)the bond buyers go bust, or b)Bernanke loses control of real interest rates somehow...

Mon, 07/23/2012 - 08:59 | 2642026 Aziz
Aziz's picture

Even at official inflation rates (i.e. very low) it's a fucking shitty deal.

It's just bond flippers, like NASDAQ flippers in 2000. 


Mon, 07/23/2012 - 08:34 | 2642003 buzzsaw99
buzzsaw99's picture

Pension funds have two choices, shit sandwiches, or shit pies.

Mon, 07/23/2012 - 08:41 | 2642038 Temporalist
Temporalist's picture

There is also shit souffle but it must not be disturbed or it deflates.

Mon, 07/23/2012 - 09:26 | 2642210 Son of Loki
Son of Loki's picture

Seniors and Pension Plans are already feeling the pain of 0.09% return.

Mon, 07/23/2012 - 09:42 | 2642253 The Swedish Chef
The Swedish Chef's picture

But RoboTard said bonds were the way to go. He said they´ll enable him to move out of his moms basement...


People searching for the oxymoron of safe yield blowing the bubble larger and larger...

Mon, 07/23/2012 - 08:29 | 2641984 Kreditanstalt
Kreditanstalt's picture

To where will the lemmings flee when it's the U.S.'s turn...?

Mon, 07/23/2012 - 08:33 | 2641996 Dr. Engali
Dr. Engali's picture


Mon, 07/23/2012 - 08:36 | 2642009 Kreditanstalt
Kreditanstalt's picture

Yes!  Which is what I'm ready for...  I don't know if I'll have more fun seeing my gold go to the moon in paper money or seeing pension fund recipients, insurers, hedge funds and mutual fundees faces when their payments are cut...

Mon, 07/23/2012 - 09:40 | 2642247 The Swedish Chef
The Swedish Chef's picture

NY open was kind to gold. Fear trade? Things might get back to normal soon... Now, if that damn bond bubble could pop already and we can get some real flight to saftey. 

Mon, 07/23/2012 - 08:30 | 2641987 sudzee
sudzee's picture

"safety" trade in everything US has to be the monster trade of all history.

Mon, 07/23/2012 - 08:41 | 2642034 Kreditanstalt
Kreditanstalt's picture

There HAS to be some punishment somewhere for Total Risk Avoidance.  LIFE is full of risks.  To the brave (should) go the spoils!  There must be a special place reserved in hell for those soaking up "riskless" bond income while sitting in armchairs...

Mon, 07/23/2012 - 10:01 | 2642308 mcguire
mcguire's picture

there is... it is called stockton.

Mon, 07/23/2012 - 08:42 | 2642039 nathan1234
nathan1234's picture

Print paper- Call it currency/money

Create bets called derivatives outside the banking system

Keep fooling the people. Give them Oprah, The Joker etc , ABCNNFOX CRAP and keep them occupied while the rug is pulled from under them

A government to fool the people, fuck the people and fix the people.

A government of the banksters, by the banksters and for the banksters.




Mon, 07/23/2012 - 08:43 | 2642044 txsilverbug
txsilverbug's picture

on the last chart.. 10yr/s&p

Good gosh look at that spread....




thats what she said..

Mon, 07/23/2012 - 08:47 | 2642058 Kreditanstalt
Kreditanstalt's picture

Maybe the risk-on (or desperate!) types are in the S&P e-mini etc....while the chicken (or cash-desperate!) big funds are in bonds.  Or maybe 99% of the S&P futures is simply seeking dividend yield...?  Who knows?  Maybe all these...

Mon, 07/23/2012 - 08:43 | 2642045 Lucius Corneliu...
Lucius Cornelius Sulla's picture

1.4% with a -2% CPI = 3.4% real yield which is not all that bad.

Mon, 07/23/2012 - 08:48 | 2642067 LMAOLORI
LMAOLORI's picture


Interesting looks like a battle brewing

US 10-Year Yields Hit Record Low on Spain Fears

Investors expect the Fed to eventually decide to either make a third round of bond purchases, known as quantitative easing, or cut the interest it pays banks on their excess reserves.

 Expectations of the latter helped push the two-year Treasury yield below the 0.2 percent level for the first time since September



Treasuries Doomsday Is Four Years Away For Vanguard

Vanguard Group Inc., whose $148.2 billion of Treasuries makes it the largest private owner ofU.S. debt, says the nation has until 2016 to contain its borrowings before bond investors revolt and drive up interest rates.

“In the absence of a long-term credible plan, we are somewhere around four years away on where the markets are going to say ‘enough is enough,’” said Robert Auwaerter, head of theValley Forge, Pennsylvania-based Vanguard’s fixed-income group since 2003 and who this year was inducted into the Fixed Income Analysts Society Inc.’s Hall of Fame.



Mon, 07/23/2012 - 09:12 | 2642143 Snakeeyes
Snakeeyes's picture

At least the Chicago Fed had a positive report today. But UST continues to plunge and will likely be a turkey shoot today.


Mon, 07/23/2012 - 09:37 | 2642241 The Swedish Chef
The Swedish Chef's picture

But, but, but...where is RoboTard and his Church of the Holy Paper? Oh, I forgot, he´s a slow reader. Or just generally slow.

Mon, 07/23/2012 - 09:39 | 2642244 caconhma
caconhma's picture

Only feebleminded can buy EU or Treasury obligations. It became totally rediculous.

Mon, 07/23/2012 - 09:39 | 2642245 CuriousPasserby
CuriousPasserby's picture

This is insane. How could anyone lock up money in this environment for 10 years at just 1.45%??? I'd rather sit on cash and get zero. Over 10 years interest rates could easily go to 3, 6, 10% Then what would those treasuries be worth?

Mon, 07/23/2012 - 10:42 | 2642483 Ned Zeppelin
Ned Zeppelin's picture

Keep in mind, everyone, that Treasuries are "storage devices" for cash that are (at least nominally) 100% safe.  When you say "sit on cash,"  think of the practical limiations on such a proposition - where exactly do you put quantities of cash in excess of FDIC insurance limits? I believe this is essential to understanding the market for Treasuries.  To me, the difference between cash, which earns no return, and Tresuries, which earn little, is simply a matter of safekeeping.  Once you are the reserve currency, and the globe is flooded with electronic USDs, this "feature" of USTs is essential.  Where else would you put them?  And, they are favored collateral. Plus there is a market - no one needs to stay in for 10 years.  The cash is simply stored there and available at a moment's notice, either by outright sale or as collateral for a loan, itself at low low rates. 

Flight to safety, and the simple practical problem of where does stash large piles of USDs in a liquid investment is your answer.   The rates are due to the flight to safety, the continuing evidence of global slowdown/depression and looming QE3.  

Mon, 07/23/2012 - 09:56 | 2642289 marz929
Mon, 07/23/2012 - 10:08 | 2642337 markar
markar's picture

Jim Willie predicted this happening in his June 27 Hat Trick letter:


The USFed in its growing desperation (hardly infinite wisdom) has been attempting to control the rising cost structure by means of a steady concerted effort to render deep harm to final demand through economic damage. They will succeed, but cause a downward spiral that cannot escape the powerful clutches of capitalism gone into reverse. The central bank clowns will win a USTreasury Bond rally to bring about the final collapse all in a Black Hole. As the 10-year TNX yield zips below 1.5% and heads toward 1.0% in the future months, as the recession gallops along and enjoys recognition, the systemic failure will be more evident.

Mon, 07/23/2012 - 11:47 | 2642801 Grand Supercycle
Grand Supercycle's picture

SPX bearish weekly chart strengthens: an important development.

As mentioned on Friday, SPX downleg continues.

Useful SPX weekly chart at my blog.


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