Treasury Yields Just Flash-Crashed

Treasury yields have been pressing higher all week on an unending wave of offers, despite an already record short speculative position.

However as 10Y Yields approached the Maginot Line of 3.00% today, the bond buying began and then accelerated and then turned into a mini-flash-crash, plunging yields 11bps...

Treasury futures also spiked at the same time on extreme volume...

Over 44,000 contracts in 10Y Treasury futures traded in 1 minute... As Bloomberg noted, 10 minute volume in TY futures exceeded that of both month-end and payrolls, with 185k contracts trading during the spike higher in price.

The long-end was also hit hard...

And Ultra futures spiked...

The entire curve erased the week's losses...


And as Treasury futures sold back off from their flash smash, so gold was dumped...

And stocks bounced....

But what makes this move most bizarre, is that this morning none other than Dennis Gartman said he was planning on going long Treasurys:

THE US TEN YEAR NOTE FUTURE: Volume Rises as Prices Rise and Falls as Prices Fall: The Ten Year Note has fallen back into The Box marking the 50‐62% retracement of the violent rally that began in mid‐May and ended six trading sessions ago. Further, the “Large” and “Small” Trader are hugely net short while the “Hedgers” are hugely net long and history tells us we are generally to trade with the “Hedgers” and to take the opposite side of the “Specs.” We’ve no position at this point but we are considering buying notes.

Normally, this would be a greenlight for a rout: recall Gartman covered his Treasury short just earlier this week, when the 10Y yield tumbled below 2.92%. So merely thinking about going long should have been sufficient to crash the world's biggest bond market, and yet the opposite happened.... is it time for a glitch in the matrix?


MK ULTRA Alpha Ron_Mexico Thu, 06/07/2018 - 14:15 Permalink

The Fed selling off it's balance sheet is a smart move but hiking interest rates at the same time is bad. The Fed shouldn't be raising interest rates at the same time it sells off it's balance sheet.

There are too many weak companies surviving on low interest rates. The US economy failed to run the creative destruction economic cycles, instead QE kept broken companies alive. There is no strong foundation, it's weak and the whole house of cards will fall.

The Fed rarely places emphasis on the input spikes in the price of hydrocarbons. The up and down spikes increase cost and are not being recorded properly by a rigged inflation measuring system. The recent spike in gas price was the same as a Fed rate hike. This should have been added to the game plan, but because of rigged inflation measuring the Fed either over shoots or under shoots the target and we end up with the continuous legacy of Fed destruction of our economy.

This system doesn't work. At some point, this corrupt system will crash for the last time and we are rapidly approaching the last chance, last time window. Many here don't realize more rate hikes will crash the economy. The US economy is now built on zero interest capital, higher interest rates will cause entire sectors to be destroyed(seen it before) and the economy overcome with wave after wave of imports until the last of the US is hollowed out.

US firms are still moving production overseas. Not one word in the business media.The entire economy is now completely dominated by government spending and Fed policy, not an Adam Smith text book example of free trade.

We're being hollowed out, the only trade agreement to save the nation from a serious and final crash would be to cut the trade deficit of nearly a trillion by a trillion. A radical cut in the trade deficit, forcing an end to the destruction of this nation. That's the only way, but because of the brainwashing of free trade and fair trade we continue with the nation losing trillion dollar annual trade deficits. It can't be sustained.

In reply to by Ron_Mexico

stefan-coast MK ULTRA Alpha Thu, 06/07/2018 - 16:04 Permalink

Just a scenario...If I have ten thousand in credit card debt at 7% meaning I pay about $200 a month to keep from defaulting..I live check by check and not much extra...Interest rate goes up and no I pay $250 a month...I dont have the extra $50, so I go into default...Now, lets raise the ante, $100,000 in debt and $2000 a month payment. Interest rate goes up and not the payment is $2500.  Do they have the extra $500 a month?  Now, lets go $1,000,000 credit card debt..$20,000 a month and interest goes up and its $25,000 a month...Do they have the extra $5,000?  Now, lets go $1 trillion in debt...ok, lets not :-)

In reply to by MK ULTRA Alpha

taketheredpill Thu, 06/07/2018 - 13:48 Permalink


Thinking today how High Yield has been rock steady (but upside limited to yield) versus Emerging Markets, where it appears the rivets are starting to pop.


Endgame Napoleon giggs Thu, 06/07/2018 - 14:49 Permalink

There is nothing free or unrigged about any of these markets: 

  1. the Fed-controlled stock market;
  2. the mercantllist-and-partially-welfare-and-child-tax-credit-subsidized labor markets, with large pools of job seekers who can afford to work part time and/or for rock-bottom-low wages;
  3. the partially Keynesian-stimulated consumer market of womb producers;
  4. the partially mercantilist and government-backed markets of goods producers, with only a few small businesses and gig workers competing without all of the welfare from government subsides, the leg up from deep-pocketed contacts or from government-owned banks.

Free markets, please...

In reply to by giggs

Bond Wizzerd Thu, 06/07/2018 - 14:02 Permalink

Why would anyone in their right mind short bonds here? fundMENTALs? BWAHHHHHAAAHHHAAA!


Buy Bonds,

       Wear diamonds

Dress British,

      Think Yiddish