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Treasury Yields Tumble To New All-Time Lows
Despite some early angst, Treasury yields have been crushed lower today. Down 7bps from their European close levels, 30Y is trading with a 2.45% handle for the first time ever and 10Y now with a 1.39% handle. Both all-time record lows as the 2Y auctions with a 4x bid-to-cover as 2s5s flattens to almost five year lows as the Fed's ZIRP and Europe's NIRP has pushed investors to front-run into preservation of capital instead of pushing them out on the risk spectrum. For those who care (instead of preferring to listen to dividend-stock-touting talking heads), 10Y TSYs have plenty of room to run if rates keep falling (15% upside if Japanification takes hold) - which prompts the question - just what is the interest expense convexity for the Government if rates were ever to rise from here?
10Y Treasury yields with a 1.39 handle...
and 30Y with a 2.45 handle...
Charts: Bloomberg
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SAFETY!
Right?
SAFETY, and a real big bubble that has to burst sometimes. Ironic isn't it.
A year ago it was over 3%. It's on it's merry way to 0...
Also, lol when playing the stocks game is safer than bonds...
This phase will make 2008 look like a kiddie pool. Dark days of earning announcements ahead ...
This, alone, is a testament to the IGNORANCE of the typical investor.
Buying the "safety" of dollars that are diluted every 4-6 months, in an investment that yields LESS than inflation steals.
All the while treating gold as a commodity, instead of the real "safe haven".
They are CERTAIN the US govt. will pay. I guess they haven't been following any of the stories about public pensions, Soc. Sec..........
greenspan alledgedly told us.. housing was the next to last bubble.. bonds would be the LAST
and goldenjackas a month+ ago suggested that once 1.5 breeched.. it would be the BLACK HOLE
stand by
Yes, but everyone is seeing a "Sea of Red" in sov yields. Just hum along to "Sea of Love."
http://confoundedinterest.wordpress.com/2012/07/24/sea-of-red-ink-europe...
Borrowing sans usury, there's your exceptionalism.
And gold still hanging in there as everything else gets stomped. Good signals for gold "competing" with strong dollar. Much like the "multiplier" not working the "manipulator" effect seems to be wearing off.
on that note, this is the second day in a row that gold and silver aren't matching tic for tic in the spot price chart...the moves look the same jaggedty-wise (forgive the terminology but I am an amateur) but the pricing level of the moves are shifted, as is the general slope...anyone else seeing that?
anyone else seeing that?
***********
Typical deflation trade-
Silver still unloading its industrial weighting and gold has diverged from the industrial metal complex and is trading in monetary fashion-although somewhat weak-but very bullish should it continue-
Silver can afford to be late-she's blinding fast when/if the monetary side starts to favor her-
Finalize your preps bichez!
No shit my sentiments exactly as I was thinking that just the past few days. Incidentally the movie "Contagion" is available on-demand which is a good example of how government will lie, people will try to save themselves and their loved ones first, realtive peace turns to utter chaos in days and a list of other disaster scenario themes.
Well Bitchez... 'cause this could turn into the FUBAR beyond all prevous FUBAR's earlier than we thought.
If you have not started... some introductory training for you city folk... not exactly, I hope, but you will get the drift!
http://www.youtube.com/watch?v=NQTIxqD2lrE
Hope this was helpful....
DESPITE THE 'DOWNGRADE'.....
holy shit on a shingle....
Gotta pay extra now for some of that "relatively" safe US Treasury paper.
Like signing onto the Titanic Lifeboat List.
Lotsa names, not enough boats!
Dividend stocks make sense, just not at the levels they've been bid up to. I'd be buying hand over fist if the Dow ever drops significantly below 10K.
I can own a stock that pays 5+% or a US Treasury Bond that guarantees me a capital loss once inflations eats the coupon and principle.
Or when that awesome divedend owning stock implodes, are you really getting a divdend or an ass raping? see CHK, ETN, MCD, etc etc etc for all those safe dividend players that are well off the highs.
Exactly. Just don't buy at these levels.
Yours is a great strategy! The only problem is that the FOMC with B. Bernanke at its head has set up an unstable system that will not allow the Dow (DJI) to go under 10000 and stay there, the amount of liquidity they have injected in the system is such that a Dow 14000 is equivalent ot a Dow 8000 of 5 years ago, due to extra dollars available in the market. So there are only two possible stable points for the Dow (and sadly, many, many more unstable ones that can lead us to crisis and more wars), way down, to 1000 to to 20000, nothing in between. The reason for the 1000 is that the crisis will be such that the companies will stop producing profits for a long time, since liquidity will keep on accumulating in the the accounts of the top 0.0001% and less and less will be available to the bottom 99% that companies will not be able to restructure enough to survive, at least most of them. The dow 20000 will occur if they keep on injecting liquidity and devaluing the value of the dollar and they simultaneously mandatorily increase wages and rescue underwater homeowners and impose losses on Senior bondholders. Since this is the only way that inflation will occur. So take your pick, but don't believe that buying at a fixed level will help you out. Earnings and dividend distributions depend on people (the 99%) having money to spend... :) Never forget that...
Until next time,
Engineer
Bernanke channeling Lincoln and recreating the Greenback????
OK, maximum upside from here in a 10 year UST is 15% with 90% of that from possible capital appreciation.
Maximum downside is a potential loss of perhaps 80% or more in the event that interest rates ever "normalize". In an unlimited money-printing and high- (not hyper-) inflation scenario, a 90% loss would be entirely possible.
Buy US Treasuries at these prices/yields? No, thanks.
15% upside? The yields could go negative!!!! (jk)
....and the sheep would continue to buy them. LOL
Imagine the new mortgage rates and MBS refis? OOGGHH!!!
http://confoundedinterest.wordpress.com/2012/07/24/sea-of-red-ink-europe...
I'm rich, beeyotch.
Not if rates rise but WHEN!!!....Then, game over. Period. Done.
If they want another spate of mortgage refis they are going to have to do better than that. It would be ironic if after all this they crashed the market to save the economy.
They will never rise. Get used to negative yields and a wee bit of inflation. Bondholders are screwed in Europe and the US. Central banks and puppet banks will buy everything. QE forever.
THE only thing holding stocks up is the Fed. Period. This is a really scary time, kids. I can only laugh at anyone who thinks we're not going to spiral into a nasty recession - Fed intervention or not.
I think with simple definition shifiting, perception management, and selective statistical reconfiguration, a recession will be easily avoided. Forever.
second that. frontal lobes are overpriced, if you know what I mean.
Serious question.
If you have a new mortage (less than five years) why not refi and save yourself a couple of points?!
http://www.bankrate.com/brm/news/mortgages/20080128_refi_FAQ_should_I_re...
Maybe I should have been a little more clear. What would be the downside if there are no closing costs to have the refinance done?!
5 more years until you own the place, unless you refi to a 15yr mortgage and save yourself a bundle.
I'm actually considering this but if I keep it at a 30 (sure I lose the years already paid in) but it will drop my monthly paytments almost 200 which will make month to month finances much easier to manage, plus it allows me that freedom wheile still having the option to pay more towards the principal anyways. Thoughts?!
If you are making the payments and plan to continue to do so then there is no downside. Some people have no-recourse loans they don't want to give up and others haven't been making payments so they might not want a refi.
Why not? Just be sure to refi with a company that won't sell your mortgage and set you up for ultimately getting screwed out of the home. Third Federal is one that offers good rates and also prides itself on not selling mortgages to third parties.
Thanks.
Can you explain a little further how one could get screwed out of their home if their loan was sold to a third party?! I'm not completely dense but I'd appreciate a simple explanation on how they could achieve this without fraud.
If you're careful enough to remedy any technical defaults in time (and/or assert that no notice was given of any technical default, which is probably required to start the clock on time to remedy), then you probably can't get screwed out of your house. But there are a lot of ways to technically default, and if the third party is diligent and litigious, and you're not, they might get a judgment against you.
Great thank you for the insight, I appreciate it.
If you are ever threatened with foreclosure, get a lawyer and make the bank produce the properly executed paperwork proving they have the right to collect a debt from you. Odds are, they can't.
The U.S treasury is like the fat lady at the bar during closing time. She looks pretty damn good at the time but when you wake up you'll chew your arm off to get out from under her so you can get away.
Just SHORT COVERED my spx shorts
of 1365, 1370 and 1380...ALL @ 1332 !!! = $$$$$$$$$
don't care if they drop to 1320 tomorrow = START BUILDING long positions !!!
i spend about 2% of the total time of stupid daytraders and others (strategists) that spend 10 hours a day watching casino...i spent about 10 minutes a day...
So basically you are saying BTFD. Lol amazing.
i coverd ALL spx shorts @ 1332
avg SHORT price = 1370..this DOG AIN'T GOING STRAIGHT DOWN...will happily reshort @ 1360+ and hopefully that will be the last breath b4 spx 1100...
don't understand "BTFD"
also what if aapl beats and casino rises tomorrow? i don't care if spx drops another -0.5%..= buy b4 the deadcat bounce...maybe i should be buying now, but i want lower prices...if pump..don't care, will just wait for 1360 to reshort....i called THE TOP @ 1380 baby!!
http://www.zerohedge.com/news/its-official-t1-not-t2-tilson-liquidates-buy-more-same#comment-2633191
Basically it means you are blindly buying the market just because "it always goes back up". That my friend is a poor trading strategy, although recently its worked if you buy the dip and sell out of your positions daily. It'll keep working until it stops, but when it stops working, look out.
This is the part of the night when you are up a couple hundred at the casino and think you are on a roll, few hours later you will be walking out empty handed.
Volume is so pathetic I'd say wait until it picks up substantially before calling any sort of a meaningful bottom to trade off of. Fundamentals are abysmal for going long here too, although a short squeeze isn't out of the question. Congrats on the profits.
Where is RoboTard? Masturbating whilst looking at a chart of his new found love government paper`
cracks me up when i see those who still don't get robo's humor.
Looks like the daily afternoon ramp took the afternoon dirt nap.
Anyone remember last year...when the 10Y was at 3?
Aye,
what they try is to dry up money markets and shift investments to longer maturities. Positive side effect, MM money flows into equity and should kickstart the economy with low cost of capital. Positive side effect, negative yields plus moderate inflation kills debt. Negative side effect debt markets are virtually dead and no money is to be made in MMs. Call it operation supertwist cause at the long end of the curve they will not intervene because of savings and pensions.
"Cash is a position." I don't like bonds or stocks. Bonds and stocks have gone too far in their respective directions. Gold or silver if it moves in the right direction.
"...the USTreasury Bond bubble...supported by Interest Rate Swaps to produce artificial demand and to create an illusion of a flight to safety in toxic USGovt Bonds..." - Jim Willie CB
I know these guys think they are just parking there money in Treasuries until things get better....6 months to a year at most.....I think its not going to get better....its going to get worse.....2 options I see..interest rates jump up as a flood of countries try to sell.....or the Fed buys everything from here on out knowing if interest rates go up...the USA is really broke...and will lose its AAA...and will lose its place in the world...so will the currency..no more reserve status......I am in gold and silver...just watching this crap from the sidelines....IMHO
Exactly. It leads to a good theoretical question for the Fed too. What is the value of a bond portfolio which generates no real income, and can never be sold or reduced in size?
Does the Fed care it's owned by it's member banks and as long as they keep making money off the taxpayers with no real risk why should they..
"The Fed sees this as a radical change. But remember that it paid no interest on reserves before the 2008 crisis and, not surprisingly, banks held practically no excess reserves then. In early October of that year, Congress gave the Fed authority to pay interest on reserves, which it promptly started doing. When the Fed trimmed the federal funds rate to its current 0-25 basis-point range in December 2008, it also lowered the interest rate on reserves to 25 basis points, where it has been ever since.
My suggestion is to push it lower in two stages. First, test the waters by cutting the interest on excess reserves (in Fedspeak, the "IOER") to zero. Then, if nothing goes wrong, drop it to, say, minus-25 basis points—that is, charge banks a fee for holding their money at the Fed. Doing so would provide a powerful incentive for banks to disgorge some of their idle reserves"
and
The Fed's hostility toward lowering the interest on excess reserves is almost self-contradictory. When Mr. Bernanke lists the weapons the Fed plans to use when the time comes to tighten monetary policy, he always gives raising the IOER a prominent role. His reasoning is straightforward and sound: If the Fed makes holding reserves more attractive, banks will hold more of them. Why doesn't the same reasoning apply in the other direction?
But suppose it doesn't work. Suppose the Fed cuts the IOER from 25 basis points to minus 25 basis points, and banks don't lend one penny more. In that case, the Fed stops paying banks almost $4 billion a year in interest and, instead, starts collecting roughly equal fees from banks. That would be almost an $8 billion swing from banks to taxpayers. There are worse things."
in full
http://online.wsj.com/article/SB10000872396390444873204577537212738938798.html?mod=googlenews_wsj
This is all being engineered. The Powers-That-Be will do everything they can to keep UST yields low. If they rise again, the deficit becomes unaffordable and the SHTF. So those in the know figure that a uber-low yield and safety is better than NO yield. The problem is that, investment-wise, you're gonna get screwed just about anywhere you turn. The only entity benefitting from this is the US Government.
But the really great news here is that Congress can continue to do nothing and stay on the credit card. Don't have to even *try* to let taxes return to previous levels, much less try to 'balance the budget' (what a joke).
Party on BitChez, we can afford our debt - let 'er rip.
Soon! My mortgage 30yr will be 1% and my house will have doubled in my price becase of affordability!!!! haha
Investors Who Stay in Treasurys 'Will See a Haircut': Gross
http://www.cnbc.com/id/48288904 http://media.cnbc.com/i/CNBC/Components/Art/Blogs/Blog_Redesign_Dot_Line...) !important; height: 2px; line-height: 2px; font-family: Arial; font-size: 20px; text-align: left; background-repeat: repeat no-repeat;">Moving toward interest rate parity with Germany.
A post from last year here attempted to back of the envelope that kind of question.
just what is the interest expense convexity for the Government if rates were ever to rise from here?
Just like Spain, Portugal, Italy, Ireland and Greece... too much to bear.
I think the foreigers will start to sell fast...prices are us and people will still use the dollar....they will use this cash to buy assets....be it gold and silver..copper...farm land...oil companies...etc...the Fed will have to buy it all..as Goldman can´t get enough Muppets to buy it all..when we finally own 95% of it..we will sit there like we just pulled the pin of a grenade.....an O SHIT moment...I don´t know what to invest in...so I sit on the sidelines in gold and silver...the New York Boys can make money daily on insider info or rate fixing..HFT´s..or daily mo mo...I can´t...I know they can not fake gold.....but they will try to outlaw it or tax it first...that is my line in the sand
it will go even lower over time.
http://expose2.wordpress.com/2011/11/20/a-voice-from-the-dark/
I stand with you at that line
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