Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

When the US Bond Market Bubble Blows Up!

Interest-Rates / US Bonds Aug 16, 2019 - 01:45 PM GMT

By: Gary_Tanashian

Interest-Rates

Amazing isn’t it? It was only back in H2 2018 when everybody but you (because you are as smart as I think you are or because you read NFTRH or nftrh.com) and me was unbelievably bearish about the TREASURY BOND BEAR MARKET!!!

Today… not so much. The herd is absolutely pile driving bonds right now.


I know this all too well because while my SHY (cash equiv.) position is doing well it’s not anything like the above, and is basically – given relative position sizes – offsetting a position in this, which I am still holding with all the stubbornness of a pissed off contrarian.

The two positions are part of my at least temporarily interrupted yield curve steepener. Hilariously the spread is up almost 500% today and just barely not inverted.

And so the Continuum continues downward.

Here, let’s magnify it so see what it actually looks like with respect to recent history.

While I am not a bond expert I do know that the 30yr US Treasury bond is the debt riddled Uncle Sam’s promise to pay and in mass herding into the long bond investors are seeking the safety of Unc’s good faith and promises. No seriously, this is the last time they are going to conspire to break the bank and spend well beyond their means.

Spend spend spend, Bush, Obama, Trump, Congress always… The chart above mentions the Fiscal Cliff, and I distinctly remember laughing at the hissy fit the markets were having with all the hand wringing about ‘will they or won’t they?’ continue to spend off the charts. Oh yes, right. They. Always. Spend.

Anyway, you’re buying bonds right now? You’re funding a spend-o-holic that just keeps adding layers of excess, talks some talk about fiscal restraint and then adds more layers… routinely and forever, until the thing rolls over, wheezes and exhausts itself… or until bond yields rebel.

Speaking of which, when – and it could still be a wait – the bond revulsion materializes, the herds clustering in bonds will be the food, the dupes funding the system yet again. A knock-on effect for me personally is that while the stock market is fairly bearish at the moment and could get more so (did you see FOX and CNN last night babbling on and on about the inverted yield curve as the cause of the market correction and its predictive powers about recessions?) this bond bubble makes me suspect of a hardened bear view on stocks.

If this is finally the great deflation, that’ll be one thing. But if it’s yet another inflationary operation in the making the gun is loading for yet another cycle. The Continuum has broken below all-time lows. Ooh, that’s scary. So is it real (deflationary crash) or Memorex (a shakeout of the inflationists before yields tear ass in the other direction with the force of a thundering herd breaking out of the slaughterhouse pen)?

Subscribe to NFTRH Premium (monthly at USD $33.50 or a 14% discounted yearly at USD $345.00) for an in-depth weekly market report, interim market updates and NFTRH+ chart and trade setup ideas, all archived/posted at the site and delivered to your inbox.

You can also keep up to date with plenty of actionable public content at NFTRH.com by using the email form on the right sidebar and get even more by joining our free eLetter. Or follow via Twitter ;@BiiwiiNFTRH, StockTwits or RSS. Also check out the quality market writers at Biiwii.com.

By Gary Tanashian

http://biiwii.com

© 2019 Copyright  Gary Tanashian - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Gary Tanashian Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in