US 10 Year Note Yield Very Long Term Chart

One picture is worth 1000 words.

This puts some teeth in the concept of 'historic lows.'

Ten Year Note Yield with SP 500

Charts courtesy of Ralph Dillon at Global Financial Data

US Treasuries: The Long End of the Curve

These sorts of wide swings in sovereign debt can be extraordinarily profitable for the trading desks of the banks and hedge funds, especially if the boss has the ear of the Treasury and the Fed. But they play hell with planning and execution in the real economy.

Che Cosa Ora? What Now

US Treasuries On the Long End Are Looking Toppy

Treasuries are not something I like to go long or short unless they are part of a paired trade. The long end of the curve is starting to look like a viable trade, unless one anticipates a short term stock market event and a flight to safety.

Friday is the Jobs Report.

People who have been holding Treasuries as a long term trade have done well. That trade on the long end of the curve is now starting to look like dead money, but these things take time to develop, and the bull trend in Treasuries has been powerful.

Gold Weekly Chart: Gold 10 Yr Bond Correlation; Bond Crash

"The CME Final indicates that on volume of 291,445 lots (27.2% or 62,000 lots higher than estimate) open interest fell 15, 107 lots (46.99 tonnes or 2.49%) to 590,685 contracts. On a stock market close basis gold was down 3.66%.

This was the heaviest volume since late May, a period of significant activity somewhat distended by the roll-over. Open interest is merely back to the level of mid-June.

A purely long-liquidation driven drop would most likely seen open interest contract more than the price fell. Some important short selling took place yesterday as well."

John Brimelow

“Gold's huge drop on Thursday is not the beginning of a new major leg down for the yellow metal. That at least is the conclusion reached by a contrarian analysis of gold market sentiment. There does not currently exist the kind of stubborn optimism among gold timers that is the hallmark of major market tops...The bottom line? The sentiment winds will be blowing strongly in the gold market's sails in coming sessions”

Mark Hulbert

I am mindful of a further breakdown in equities, but the more likely we will see an important sector rotation in July from bonds to stocks, and this may provide further lift for gold.

However a short term trading range seems more likely to me now, since the bullion banks seem so terrified of gold breaking up through the 1260 level. It is not inconsistent to have a protracted handle on the current cup and handle formation on the daily chart.

What are they afraid of? The physical offtake at the COMEX, especially in silver, was beginning to cause enough strain to raise concerns of a market 'break' which would be highly embarrassing to the Obama Administration. The last thing they need now is another scandal of failed regulation and crony capitalism. But this does not resolve the problem; it merely kicks the can down the road.



Although the correlation is far from perfect, indicative of the variety of drivers that constitute the gold price, the relationship between the 10 Year Note and the Price of Gold has long been in my dataset. It makes fundamental sense when you think about it. But it should be stressed that it is only a minority correlation, and its influence waxes and wanes, especially since the prices of both assets are subject to official meddling by the Treasury and the Fed.



Someone asked me if Big Daddy was Warren Buffett. No, its trader slang for the 30 Year US Treasury Bond.

Speaking of an expected sector allocation smackdown in July, I would not be surprised to see the wiseguys driving investors out of the bonds in July, shoving them into riskier trades, the better to eat you with, my dears.

The US bond is a fairly safe place for now, as long as you don't worry about the coming devaluation of the dollar which I would expect to hit around 4Q this year when they recalibrate the SDR.

But Bonds do crash. Here is a representation of the Bond Crash that followed the stock crash of 1929. See the flight to safety, and then the collapse as the dollar was devalued, a form of soft default? Cyclepro originally posted this. As I queried him he said it was based on data from Martin Armstrong. My own analysis indicated these were not Treasuries but corporates. Treasuries did 'crash' but not to this degree. But the point remains that bond at some point will be no safe haven.

When will this crisis bottom? I don't know, but it will almost certainly end badly because the kleptocracy forgot rule number one of the Trade: bears make money, bulls make money, but pigs get slaughtered.