It’s admittedly an excruciatingly boring subject, one made worse by the ghoulish personalities of most people who talk about such things, but there is no denying that hugely important developments are underway in Treasury yield curves. Check the following two figures to see the rapid steepening under way — the tail in the first graph shows changes in last 30 days; the following graph is declining prices year-to-date of Treasuries at various durations. I
In short (no bond pun intended), rates are going up in spiffy fashion as investors decide that Treasuries aren’t really that much fun for holidaying any more. Next crisis they want to vacation elsewhere.
Originally published at Paul Kedrosky’s blog and reproduced here with the author’s permission.
2 Responses to “Honey, I’m Done with the Whole Treasuries Thing”
Many believe this is nothing more than a sign of strengthening U.S. economy, with investors seeking riskier investments they sell Treasuries and redeploy to equities, et. That seems to be the sentiment generally, particularly among the CNBC crowd. Yet, the financing needs of the U.S. government are so expansive that I believe the rise in long rates indicate something different than the normal cycles. I’m beginning to believe that we have a true currency crisis in the offing, with investors seeing the huge amount ob bills and notes being scheduled, and the Fed’s quantitative easing as signs that we are putting the pedal to the metal. I think too that what in the past would be viewed as a minor rise in rates may have far more serious consequences now in this environment of unknowns and “never befores.” When one hears about Keynes’ ideas about a commodities based currency regime being actively discussed right under the noses of our Treasury officials, one may have cause to worry. Quo vadis?Mike at http://mytinyspot.blogspot.com
It is finally summer. In the summer I used to wear shorts alot. This summer I am not wearing my shorts, I am employing them. I am shorting intermediate term Treasuries (Scared of long)and the Equity Index’s. You cannot float this much debt without severe consequences. My only long positions are bullion, mining stocks and oil.While I am currently getting my shorts handed to me on the equity side, no pun intended, I am more than making up for it in my other positions, My motto for this summer is” let the equity traders enjoy their time in the sun because pretty soon it is going to rain on their parade. I am concerned that the U.S. will soon be known as the “Stagflation Nation”