Inversions Galore!

The number of US Treasury bond inversions took a big leap today. I count 5 inversions, three of them with the 1-Yr bill.

In this snapshot, the 5-year, 3-year, and 2-year treasury yields inverted with the 1-year yield.

In addition, the 3-year yield inverted with the 2-year yield and the 3-month with the 1-month.

Debt Worries?

Despite the flattening and now inverting yield curve, note that the spread between the 10-year and 7-year bond actually rose over the course of 2018.

The spread between the 30-year long bond and the 10-year note is nearly what it was a year ago.

I believe this is a strong bond market signal that the end of the bond bull market approaches. It's possible it's already over. But I do expect one more strong push lower in yields as recession hits in 2019.

We have enormous deficits as far as the eye can see from a starting point of $21 trillion in debt.

Got Gold?

Mike "Mish" Shedlock

Comments (10)
No. 1-7
Escierto
Escierto

Gold was up strongly today but the mining stocks dropped. Not a good sign for gold.

gregggg
gregggg

We've been watching it move for a month now. The last week and a half huge accelerations from flat to inversion. Looks like snakes wrapped around a straight pole if you make the graph of the last month.

Ted R
Ted R

I'll take silver to.

skippy182
skippy182

Gold isn't believing this latest rally in the market right now, as it keeps inching higher. A break above 1300 and gold should be off to the races very quickly.

hmk
hmk

The miners will give you the most leverage to gold price appreciation. Gold in general isn't a great investment. I keep some physical gold/silver just as in case of shtf scenario which I think is unlikely. Keep in mind just before the last financial crisis gold and silver ran up quite a bit and crashed along with all assets. It did go up again when the money printing and quantitative easing began but started a long descent after peaking for a couple of days. It goes up almost parabolically on occasion and peaks for a very short period. The key is to try and sell when that happens.

AWC
AWC

My guess is, in a liquidity crisis, physical Au will catch a better bid than paper. That is, pondering a run on ETF’s, mutual funds and like kind non insured instruments. Not to even venture into the dark world of derivatives.

AWC
AWC

A question comes to mind. If the $15 Trillion mutual fund industry is too big to fail, what entity is big enough to bail it out? Especially when all those financial holdings hit the equity and securities markets in a massive sell off? I would suggest that back in the last liquidity squeeze, had the FDIC not encompassed the Money Markets to prevent breaking of the dollar, the crisis would have spread to mutual funds. What if next time the FDIC’s bluff is called? Scary!