Hello Treasury Bears: 10-Year Bond Yield Approaching Record Low Yield

-edited

Treasury yields are down again today, the 6th straight day of strengthening inversions. 30-year to FF inversion on deck.

The relentless march to more Fed cuts and record low bond yields continues its merry way.

Yields are down again today.

Line in the Sand

I seem to recall a "line in the sand".

Where was it? Wait, I remember.

Flashback May 28, 2018

Please consider Hello Treasury Bears: About That 3.0% Treasury Yield Line in the Sand

My Comment at the Time

Note to Bill Gross, MarketWatch, the Edelson Institute, the Financial Times, Jeffrey Gundlach, Heritage Capital, and numerous other forecasters not caught up in that precise search: The is no such thing such as a line in the sand that when breached cannot be crossed back.

Technical lines in the sand are one thing and fundamentals another. This is not like nuclear war which cannot be reversed.

The same people have been calling for the the end of the bond bull market for a decade. Perhaps they have it right, but the fundamentals suggest otherwise.

The economy is slowing and the Fed is hiking. The stock market is likely headed for another bust. There is a new worry in Europe. China is slowing.

Yes, we have late stage inflation, but so what?

There is no magic line in the sand. Neither the economy nor the bond market work that way.

Treasury Bears Take Note

Pimping the Mid-Cycle Adjustment Thesis

Yesterday, in a speech called "Sea of Change", St Louis Fed President James Bullard pimped the "Mid-Cycle Adjustment" Thesis in which supposedly there may not be any more rate cuts this year.

The Bond market vehemently as do I.

Trump's Reckless Tariffs Worsened the Global Problems

Yesterday, I noted Trump's Ignores Advisors, Doubles Down on Failed Policies, Kudlow Won't Comment.

A Global Manufacturing Recession Started and Trump's China Tariffs Made Matters Worse.

The situation came to a head when the US Treasury Declares China a Currency Manipulator Under Orders From Trump

Hello Treasury Bears

Let me make it simple: It's the debt, stupid!

The global economy is choking on debt as central banks are determined to have more of it.

Inflation? Forget about it. The bubbles are proof we "had" inflation. The Bond markets says something else is coming up.

Mike "Mish" Shedlock

Comments (25)
No. 1-12
jivefive99
jivefive99

The increase in property taxes which I guess are not included in govt inflation numbers apparently are imaginary costs to those of us with wallets. I suppose the Labor Dept figures the inflation will eventually come thru in higher rents and higher store prices. That aint gonna happen when stores and landlords cant raise prices cause their competitors will underprice them. Fakery on top of fakery.

Tony Bennett
Tony Bennett

Bill Gross?

Some "Bond King".

He's been wrong for YEARS.

lol
lol

All in preparation for first ever NIRP in North America and biblical levels of fresh (overt)money printing,QE4 will be massive,over a trillion a month ,if the govt near complete collapse look for the fed IMF along with the fed to take control of the treasury forcing president Chump out and installing a receiver or a puppet regime.

Tony Bennett
Tony Bennett

"Inflation? Forget about it. The bubbles are proof we "had" inflation. The Bond markets says something else is coming up."

...

Class DISMISSED.

Well Done

leicestersq
leicestersq

What is that something else that is up Mish?

I think I agree, something is up, but I dont know what. The thing I cant quite get is all those bonds with negative interest rates. Unless there is a large cost to holding cash, then negative interest rates make no sense unless the buyer is the state and crooks are in charge of other people's money, or crooked people in the state have created laws that force some market participants to buy things even when they should walk away.

If I make the assumption that the cost of holding cash is low, then I cant see how the bond holders are going to lose money if they are holding negative rate bonds. There cannot be an endless supply of greater fools. Negative interest rates make no sense as a logical trade. Even if rates dont rise very high, say lower than positive 1%, losses will be taken when interest rates go positive, and those losses will be painful. There is though, a good chance of a stampede out of bonds when the market realises the madness of accepting to interest rates that fail to reflect the risk of inflation and full repayment. Even if there are no inflationary forces, the fear of further bond price falls if and when they start to happen, could be spectacular. I can see why gold is doing well.