It's different this time... The last two times that Fed hike probabilities (and thus timing of liftoff) surged, the long-end of the bond market rallied (suggesting a premature hike would slow the economy medium-term). The last few days, since The FOMC Statement, Treasury yields have surged (with the short-end underperforming) as 10Y tops 2.25% and 30Y nears 3.00%. As BofAML noted, "if The Fed hikes rates and the long end yield tumbles, that means policy failure," and so we suspect, in all its confirming-bias perfection, the long-end is being sold to 'convince' the world that The Fed is right to raise rates.
December rate hike odds have surged to series highs...
[3]
And Treasury yields have soared, with the short-end underperforming... (notice 30Y actually rallied on the hawkish Fed before ripping higher in yield - on rate-lock chatter amid huge issuance)...10Y back above 2.20% (highest since 9/17) and 30Y nears 3.00%
[4]
And notice that in July and again in September, as rate-hike odds rose (and liftoff timing approached) bonds rallied, this time, however, they are selling off...
[5]
Must make sure everyone "believes" this time...
Charts: Bloomberg
