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Until proven otherwise, we're in a long term secular bull market for US T bonds

Yeah, since about 1983.

Getting a bit long in the tooth, IMO.

Back under 1.50 at 1.499 and falling...

I can't wait for THIS bubble to pop. It has EPIC FAIL written all over it.

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I can't wait for THIS bubble to pop.

When you say "bubble", do you mean big-ass stinky zit that smells like bad cheese?

"I can't wait for THIS bubble to pop. It has EPIC FAIL written all over it."

Not yet Fraud.

There are too many bond markets to topple in Europe first. The market forces are slowly closing in on the CB's.

Rising Spanish/Italian bond yields are the only thing that gives me any hope that market forces still exist.

The bond vigilantes never died...They just moved across the pond!!

Did we just have a reverse flash crash in the 10 year? That was quite the whipsaw.

Pretty bad numbers out of the 10 year auction today.

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Only one word to explain the just completed 10 year reopening auction. WTF!!! While the 10 year When Issued was trading at 1.516% at 1pm, when the release hit of the final High Yield on the bond, jaws dropped, as it came at a shocking 1.459%, nearly 6 bps inside of the WI, a record, a yield which also was a record, a Bid To Cover of 3.61 which was the second highest ever, second only to the 3.72 in April 2010, but it was the internals that were the most jarring of all. Unlike all recent auctions in the past 4 years, the Primary Dealer take down was only 14% a record low in recent years, and a hit rate of 6.8%, another record low. The offset: Directs, which took down a whopping 45.4%, another record, after tendering a record $16.9 billion in bids. All in all there was no definitive reason to explain why this auction was so very, very off the charts, and so mispriced by the secondary market, suffice to say WTF, and that this is what happens when there continues to be just one game in town: frontrun the Fed! Three possibilities: i) either someone was caught massively wrong-footed going into the auction and covered a massive short into the primary market, ii) capital reallocation from European money market funds which as we explained last week are now all dead, or iii) some "Direct" entity somewhere, has a gaping need for good collateral and would literally pay anything for US paper ahead of an even bigger margin call. If the latter, we will find out very soon.

Charts: http://www.zerohedge.com/news/10-year-bo....

Low bid on the inside was 1.36%.

Somebody wants safe paper at any price.

Or needs.

I think we stay low until we don't. Then I don't know if it would do you any good to be short. The Ponzi math just doesn't work with higher rates.

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Ponzi math just doesn't work with higher rates.

yep

The trick to getting filled in a flash crash? put in a limit order in above where the tape says you are at - MAYBE! worked for me last time.

1.41% this morning!

In the eleven quarters of this expansion, the growth of real per capita GDP was the lowest for all of the comparable post-WWII business cycle expansions. Real per capita disposable personal income has risen by a scant 0.1% annual rate, remarkably weak when compared with the 2.9% post-war average. It is often said that economic conditions would have been much worse if the government had not run massive budget deficits and the Fed had not implemented extraordinary policies. This whole premise is wrong. In all likelihood the governmental measures made conditions worse, and the poor results reflect the counterproductive nature of fiscal and monetary policies. None of these numerous actions produced anything more than transitory improvement in economic conditions, followed by a quick retreat to a faltering pattern while leaving the economy saddled with even greater indebtedness. The diminutive gain in this expansion is clearly consistent with the view that government actions have hurt, rather than helped, economic performance.

Economic conditions have been worse in euro-currency zone countries, the UK, and Japan. All three of these major economies have also resorted to massive deficit financing and highly unprecedented monetary policies, and all have substantially higher debt to GDP levels than the United States. The UK and much of continental Europe is experiencing recession to some degree. Whether Japan is in or out of recession is a pedantic point since the level of nominal GDP is unchanged since 1991. Even such prior stalwarts of the global scene such as China, India, Russia and Brazil are plagued with deteriorating growth. In such circumstances a return to the normal business cycle of one to two rough years, followed by four to five good years, remains highly unlikely in the United States or in these other major economic centers.

Based upon the historical record of effects of excessive and low quality indebtedness, along with the academic research, the 30-year Treasury bond, with a recent yield of less than 3%, still holds value for patient long-term investors. Even when this bond drops to a 2% yield, it may still have value in relation to other assets. If high indebtedness is indeed the main determinant of future economic growth and further government “stimulus” is counterproductive, then a prolonged state of debt induced coma may so limit returns on other riskier assets that a 30-year Treasury bond with a 2% yield would be a highly desirable asset to hold.

http://www.hoisingtonmgt.com/pdf/HIM2012....

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If high indebtedness is indeed the main determinant of future economic growth and further government “stimulus” is counterproductive, then a prolonged state of debt induced coma may so limit returns on other riskier assets that a 30-year Treasury bond with a 2% yield would be a highly desirable asset to hold.

This is precisely what a 1.41% 10yr foretells and is why you should be very concerned about such a low rate. That EZ are piling into it is secondary. The deflation and risk trade on everything else, and lack of return, is what this predicts.

I think you are seeing the result of DECADES of easy liquidity. The Greenspan/Bernanke years resulted in WS players making EASY (ie FREE) money and they are now drowning in $$$$ which they are content to hold at 2%. It is money they never should have had in the first place.

Look - you make money cheap and the top will buy the bottom with it and as long as Ben monetizes/prints, they will continue to do that. Even if the threat of default is there, it is still a bargain because of this.

If you make money easy then there is no risk to holding it, thus the rate drops to 0.00 because there is so much of it and it's easy to work the tiniest of spreads if you are first in line for the trillions.

Lend 5M to your wife from TARP, she invests it at 1.41% and earns 71k in a year for doing NOTHING. As long as the elites can profit, 1.41% is not bad...to them.

That's it right there. It doesnt matter how low the rates are, if you are of the priviliged corrupt few (the club) who can borrow at 0%, then you're just giving yourself free money, even at 0.0001% interest. (We might get there some day if the sheeple let it get that far.)

All that free money comes off the backs of everyone not in the club. Until the average person on the street sees this for what it is, it simply will not stop.

The bond market has long phrases, like Miles Davis jazz.

IMO anyone who isn't shortening duration and adjusting portfolios for credit risk down the road just isn't getting the macro meme, and instead is playing in the credit spread sandbox quarter to quarter.

As has been said, that works until it doesn't.


N/not investment advice

1.404

1.396

REFI!!!!!!

Already on that train. Finishing up paperwork on a 3% now.

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IMO anyone who isn't shortening duration and adjusting portfolios for credit risk down the road just isn't getting the macro meme, and instead is playing in the credit spread sandbox quarter to quarter.

I have been watching that closely. Right now my bond duration is just under 3 years. Hope for the best.

If you bought bonds in any serious quantity since last year or two, hats off to you. Bonds have been ripping off some major gains over the last few months in particular.