trading all day between 0.01 and 0.00
run and hide.....

No one in their right mind would pay the US government to hold their money. That is really what you are doing. Interest rates are negative.

I'm not waiting for "the market" to figure this out.

2 months swap rate at ATL

http://noir.bloomberg.com/apps/cbuilder?....

Rates are that low because the institutional money can't find a better place to hold cash. Uncle Sugar is about the only place large enough to park it. It isn't as if someone with $1B can go to the local bank and get 10,000,000 Ben Franklins to hold for a month, or less.

When the yield goes negative, you are just paying a storage and convenience fee for large sum of cash.

-5% is a "storage and convenience fee"? No thanks.

More like trusting we have the most corrupt political leaders money can buy.

I think the moral here is that there is nowhere safe to park your capital. Short term notes? Nope. Stock market? Nope. Gold & Silver? Go look at a chart for the last 2-3 weeks. Nope. Cash? Nope, look at the price of food and other commodities. Housing? Lol. Invest in a business? Lol.

@Fraudster,

I agree. You are essentially saying that all asset classes are at peak value and carry maximum risk.

Deflation is the next and necessary step.

I agree with Eleua on this. Seems then Bill Gross is wrong. I believe he is much much smarter financially than I. Ummm.

Bill Gross is definately right.

When it comes to bonds how did deflation work out in Portugal, Ireland, and Greece???

We will be called out just like every other bankrupt country. It's just a matter of time.

Get real peeps:)

He seems way way too early.

I agree, I think he is right, but early. I think we have one more deflationary scare left and then it will be monetize to the hilt. We shall see. But for now, not many places to safely hide.

Interest rates on bonds go up in deflation. Bill Gross can still be right even if we have deflation.

Interest rates go up during deflation. I believe that is a delayed reaction to deflation. Seems to me that money would race into US bonds initially as a "safe haven" as the equities markets contract during the initial stages of deflation.

Then the rates go up, I think. But in the case of the US being the reserve currency and possibly perceived as the "safe haven" during a deflationary period (collapse) I am now wondering if that is as true a thought as I have always believed.

There could be a extended period of time that rates don't go up on US bonds if there if they are the one perceived safe haven.

I don't know the answer, but I am sure I am going to find out.

Most likely we will have a deflationary crash, need a catalyst, as the Bernank will not want to look like he caused it by pulling liquidity. Then when money rushes into the long end, they will refi the government debt, thus buying themselves more time. Then is the time to short the long bond. There just won't be any buyers left after the safe haven rush. This is definitely their game plan, but they don't want anyone to know it. But the people buying bonds now already know it.

"Then when money rushes into the long end"

Money is not going to rush into the long end especially with a QE3 looming. Buying 30 year bonds is suicide at this point. The risk rewards imply isn't there for a 4% yield.

Bond investors will avoid the long end like the plague. They will sit in the short end until all of this **** stops.

The Fed is artificially suppressing bond yields by buying 70% of them. This will all end in a hurry if they withdrawl from the bond market(which I am not sure they will do).

I'm thinking more of the 10 year than the 30 year, yes you'd have to be nuts to rush into the 30 year.

I think you are nuts to be in anything that isn't an manifestly cash instrument (1yr or less). Bonds are at nosebleed prices. The deflation monster is going to come and reduce the price of all assets, especially the long end bonds.

The only "rushing" any money is going to do is foreign money looking for a temporary place to hide.

Quote:

The only "rushing" any money is going to do is foreign money looking for a temporary place to hide

Right into the USD.

Which drives down equities and people put their money where??????

US Bonds???? Which decreases rates until it doesn't.

@Wyo,

Circulation drops faster than asset depreciation which results in lower money supply. The reason foreign money would come into the US is because they are trying to protect it from their own deflation monster.

Gross wouldn't be net flat or short treasuries unless he already knew that there will be no QE3.

My best guess is we get QE3 this fall. Markets (all of them) will need to fall first so there can be justification for more "easing".

and the BLS "adjusts" unemployment a lot higher.

Quote:

Invest in a business?

Actually...it depends on the business, but unless we all pull an Egypt, that may be your best option.