The 30-year long bond yield rose above 2.00% on September 5 and stayed above that rate for over a month.
From September 13 through 15, the yield topped at 2.375%.
I am wondering how much of that spike is related to overnight funding topping 10.0%.
Regardless, welcome back sub-2.0% we missed you.
A slew of bad economic reports is behind the collapse.
On October 1 the ISM reported Manufacturing Worst Since 2009 on Severe Contraction of Export Orders.
Also note, the Fed has Recession Tools, Promises to Use them Quicker Next Time.
Mike “Mish” Shedlock
Get used to it. And in time, the handle will be 0. Hopefully the number will stay above 0. But, it wouldn’t shock me if it went negative.
Since US Treasuries are no longer market priced (and haven’t been in many years), the government imposed yield on whatever maturity has no meaning and no significance.
The yield is whatever the Fed committee decides it is. There is very very limited liquidity in the Treasury market, and no price discovery going on at all.
Yes, a decade ago Treasuries was the most liquid market on the planet (by a long shot). But that is no longer the case.
Credit card rates continue to go UP, not down.
Even though car loans are “free” (0% financing etc) — the financing is actually built into the price, even for used cars. When was the last time a car ad displayed the actual price of the car, instead of lease / financing terms?
At least 80% of new mortgages now are underwritten by the federal government (FNMA, FHLMC, GNMA)…. the rates are set by politicians who are desperate to keep home prices elevated (capital gains taxes, property taxes, bank bailout costs, etc).
We all joke about Government Motors no longer being a private entity except on paper.
Its time to acknowledge the US Treasury market is mostly the US government on both sides of trades.
US treasuries are market priced. The only exception is when the FED is expanding their balance sheet. Which they kind of are with their repo interventions. And even then, they’re market priced. it’s just that having an enormous buyer that isn’t interested in making a profit tends to distort things.
The main reason rates are falling is because the alternatives are worse.
I don’t think you have ever traded Treasury bonds professionally. The cash market is close to dead. On the run issues don’t trade anywhere close to what they did before 2008, and off the run issues barely trade at all.
Similar to Japan, which did the same dumb monetary policy, more than a decade before Bernanke took credit for “his” idea, JGBs (Japanese government bonds) do not trade anything like what they used to…. although the JGB market is far more dead than the US Treasury market.
UST are not market priced, and if you are trying to argue otherwise it tells me you never worked at a primary dealer. Collapsed Treasury liquidity not something anyone in the business would argue about
“I don’t think you have ever traded Treasury bonds professionally.”
…
And you have?
YTD daily volume $604 billion … 13% higher than last year.
I said Treasury bonds are not market priced, that there is little if any price discovery going on. That would require a large number of trades, by a large number of independent entities each trying to determine the appropriate price for themselves.
In a demonstration of your ignorance, you quoted the total dollar amount traded. You didn’t mention how much is traded by the Fed, how much is traded by price takers (who just buy/sell at the current price), and how much is traded by persons trying to determine an appropriate price. Only the third category would matter for price discovery….
Why am I bothering. You are an idiot.
“Why am I bothering. You are an idiot.”
….
Cuts both ways.
You have failed to show a single shred of evidence to back your point.
Anyways, I learned long ago that FOS posters who can’t back their argument resort to personal attacks.
“US treasuries are market priced”
End the Fed and see if 30 year rates still remain below 2%…..
Narrowly, technically all transaction prices are “market prices.” As they are all the result of a buyer and a seller agreeing on a price.
But for “market prices” to have any meaning, prices have to result from a fairly free and unrigged market. Even absent ANY Fed balance sheet expansion, the mere fact that The Fed is assumed to stand ready to do what it takes to prevent a nominal default on Federal debt, is an intervention waaaay beyond anything that would allow federal debt to be “market priced” in any meaningful way.
The reason why a $20Trillion+, and expanding fast, debt load; in what is, in practice, at best a stagnant economy; can still be jawboned into being “risk free,” is specifically because The Fed is assumed to stand ready to debase anyone else into outright starvation, as their colleagues in Venezuela are doing, before letting the guys with the guns who backstop The Fed’s privilege to do so, will be forced to nominally default. None of which has anything to do with what the term “market prices” is intended to convey.
“But for “market prices” to have any meaning, prices have to result from a fairly free and unrigged market.”
…
True. But please name ANY substantial market that isn’t rigged to some degree.
Low wage and technical labor are as close to “free market” as we get here in the US due to essentially an open southern border and the H1-B visa program (along with other avenues by which technical workers have entered the country the past quarter century).
The fact that we need to clarify market versus free market in our discussions just shows how far we’ve come to where everything is practically rigged these days.
It’s not really about other markets. But rather about whether economic insight deduced from the assumption of free markets, have any relevance at all, in situations where Mao, or The Fed, that says all Chinese eat rice and operate an iron smelter; and that debt which will never be paid back, is still risk free.
Stuki – I enjoy your posts, but I operate in the real world … not your dystopian universe.
“Credit card rates continue to go UP, not down.”
I stumbled upon an ad for something called an Aquacard over there in that dreadful place called the U.K. 69,5% APR.
Since this is an approved lender, this answers the question about the state of moral and how incredibly broken the system is, not just in the EU, but of course in the USA too.
And you’re right, everything is priced for financing.
It must just be me who just looks at this, confused, terrified and shaking my head about the mixture of greed and glutony.
This is a house of cards and there is no other outcome for the thing to collapse, catch on fire or blow away….pick your poison.
Treasuries arent market priced? They’re the biggest private market in the world. Wtf?
What is my upside? It will cost me some time to write the explanation, and more to argue with imbeciles like@[Tony Bennett] who confuse dollar volume traded with price discovery.
Its Mish’s blog.@[Mish Editor] gets whatever revenue from ads. Advertisers will look at number of visitors and quality of visitors, and you two are the sort that boiler room brokers love to meet.
Its Mish’s blog. So you are his problem
STILL
Not. A. Single. Shred. Of. Evidence.
to back your point.
The daily volume I quoted was trades by the PRIMARY DEALERS.
Yes, Treasuries are in fact subject to market forces.
Do you seriously think the Federal Reserve manipulated the Treasury market to have inversions galore??
(1) I do not owe you a single piece of evidence. This is not a court of law. You are not a prosecutor. You have a delusional sense of self importance. No one owes you a damn thing.
(2) if you want “evidence”, get off your lazy -ss and go do some research. Learn to use Google. Read any of dozens of stories about major banks FICC departments. Read the posts on Mishtalk about repo problems and the Fed doing extraordinary financing operations (which wouldn’t be needed if things were as liquid as you fantasize).
The predominant usage of treasuries is as collateral in repo transactions, is it not? Or, more generally, securities held on reserve in case of a collateral squeeze in said market? All the repo mess would explain the crashing rates
Has anyone ever told Trump and his cheerleaders that unemployment is a lagging indicator?
I assume you mean unemployment lags the recessionary economics (recession precedes the unemployment rise).
50 years of your heart beating just fine has no bearing on what happens when the plaque breaks free….