Treasury Yield Curve Crashes To New 10Y Lows After Hotter-Than-Expected PPI

With a December rate-hike baked into the cake (odds as close to 100% as possible), the hotter-than-expected PPI print has sparked notable outperformance in the long-end (amid Fed-driven slowdown fears) sending the yield curve to new cycle flats - flattest since 2007...

 

The last two times the yield curve was this flat, the US economy was in recession...

 

As a reminder, it took The Fed driving rates up to 5.25% before financial conditions finally snapped tighter...

 

But The Fed has only around 100bps of tightening space before the curve is inverted this time.

Comments

DEMIZEN Tue, 11/14/2017 - 08:55 Permalink

the market is getting heavy. heavier than a bitch pushing a full cart of twinkies, soda, and beef ground. but somehow, this will turn to be good news and a buy.

eclectic syncretist DEMIZEN Tue, 11/14/2017 - 09:23 Permalink

Feels kind of toppy to this old-timer. Volume has gotten so low, and valuations so high it feels like there must be some substantial air pockets below. However, if the Fed is going to just buy all the stocks (illegally, I might add) everytime they begin to equilibrate towards true value, they could continue to make the situation even worse.

In reply to by DEMIZEN

DEMIZEN eclectic syncretist Tue, 11/14/2017 - 11:30 Permalink

what is worse misalocation or no alocation at all? it depends whom you ask. a competitive .gov doesnt care who is running the show in the long term as long as the base is paying taxes i assume. if the central bank is controled by.gov they will always try to inflate themselves out of trouble.maybe the fed is just not as independent as it used to be back in reagan times? maybe the money supply is indeed controled by the tribe

In reply to by eclectic syncretist

bobert727 Tue, 11/14/2017 - 09:11 Permalink

Greenspan left rates too low for too long leading to reckless speculation. It's deja vu all over again. Except this time, instead of the average American holding piles of debt, the US Government is sitting on $20.5 Trillion and the Fed $4+ Trillion. Too big to fail? I think not.

eclectic syncretist Tue, 11/14/2017 - 09:14 Permalink

"With a December rate-hike baked into the cake (odds as close to 100% as possible)"I'll believe they have the courage to do it when it happens. Until then, 100% is hard to believe.