Look at the chart of long-term T-bonds:
The last 3 minimums made a very clear neckline for a potential head-and-shoulders, but the chart happily bounced again to start the next run up. Until yesterday. The chart fell back to the neckline. If it bounces it’s all fine. If it falls through down we’ll have a nasty downfall of treasury bonds in the face of deteriorating economy. The consequences could be pretty nasty.
What’s the reason? Please read here.
May 4, 2008 at 12:57 am
Get ready, either taxes are going to increase or inflation is going to rise with the upcoming funding needs of the treasury. This will be particularly difficult timing as many on our foreign treasury buyers are looking at de-pegging their currency from the dollar.
May 4, 2008 at 1:15 pm
The Fed playing “Hide the risk”
The Taxpayer is the final bank, not the Fed.
The shit sandwiches the Fed hides (after Friday including student loans and unsecured credit card/depreciating asset auto debt) begin to smell more and more in Treasuryland
Now we get socialized blowback in the form of higher rates for all……
Prop stocks and collapse Treasury prices/ramp rates.
Yin/Yang.
The symmetry is beauty.
I wonder what happens to mortgage rates, home prices, and a reeling consumer if the 10yr benchmark yield simple reverts to its historical mean average?
I wonder what happens, if in this environment, it say……overshoots a bit?
May 5, 2008 at 11:21 am
Watch the bonds! The big battle is happening right now!
May 6, 2008 at 8:01 am
[...] Investing The trouble in BOA-CW deal came at interesting moment. As I’ve noted here, the T-bonds are at the most critical juncture in 10 months. Too much complacency (VIX sub 20 for a [...]