Treasuries cracking now: "financial Krakatoa"

[c1ue]

Re: Treasuries cracking now: "financial Krakatoa"

One little problem: rising 30 year is going to impact mortgage interest rates.

And that's going to send an already hurting housing market even lower. With more foreclosures.

Which will hurt the banks even more.

Which means another round of 'capitalization'.

But dream on...

[icm63]

Re: Treasuries cracking now: "financial Krakatoa"

A Worry.jpg

Its not inflation - YET
Its not deflation - as interest rates would fall.

Its a vote of no confidence as China BUYS ONLY SHORT TERM DEBT, and leave the LONG BOND to others....thats a worry...

[Guest]

Re: Treasuries cracking now: "financial Krakatoa"

Drumbeat for USD to execute it's long awaited major swan dive is getting nearer, stronger, thumpier, louder. It's syncopated, frightening beat is beginning to sound like an entire approaching ARMY. Darius the Great himself approaches, with vast Persian armies. The "dollar-decapitors", are at the door! The wolf is in the house! The cat is out of the bag! The goose is hoist by it's own petard and whatnot! :eek:

[ricket]

Re: Treasuries cracking now: "financial Krakatoa"

Drumbeat for USD to execute it's long awaited major swan dive is getting nearer, stronger, thumpier, louder. It's syncopated, frightening beat is beginning to sound like an entire approaching ARMY. Darius the Great himself approaches, with vast Persian armies. The "dollar-decapitors", are at the door! The wolf is in the house! The cat is out of the bag! The goose is hoist by it's own petard and whatnot! :eek:

suncopate?

Hah! Nevermind. You beat me to it.

[ricket]

Re: Treasuries cracking now: "financial Krakatoa"

[ATTACH]1624[/ATTACH]

Its not inflation - YET
Its not deflation - as interest rates would fall.

Its a vote of no confidence as China BUYS ONLY SHORT TERM DEBT, and leave the LONG BOND to others....thats a worry...

I wondered about that too when the MSM was reporting on how strong the UST demand was at the 2 year auction. But then I was thinking, what if they just switched most of their holdings (as EJ more or less recommended to subscribers) to the shorter end of the purchasing? I'm awaiting the upcoming results of the longer dated sales tomorrow and next week...perhaps there is a hint of a weak auction, and that is what pushed up yields by almost 5% today?

[cjppjc]

Re: Treasuries cracking now: "financial Krakatoa"

anyone else buy TBT (look it up at finance.yahoo.com) to profit on this? I, by trade am a (poor?) financial advisor but, this has been one of my client's best investments. yes, i AM new, but no, this is NOT spam btw... TBT double shorts the price of treasuries. there are a few other similar ETFs that do the same.

I've done well with PST. Traded it a few times. This time I've held.

[Housing-Bubble]

Re: Treasuries cracking now: "financial Krakatoa"

I've done well with PST. Traded it a few times. This time I've held.

bought TBT at $38-$42 for some clients...got in at $44 myself...have just held it...the only thing that scares me is the intermediaries involved - that is: what if the counterparties do not pay off as required/expected. other than that, it has been and continues to be an "obvious bet", if not a sure bet with the treasury bubble.

[Dridamse]

Re: Treasuries cracking now: "financial Krakatoa"

NOT A JOKE
Dominique Strauss-Kahn anounced that for the first time IMF starts to sell SDR denominated Bonds amount? 500.000.000.000 dollars. Russia anounces the purchase of 10.000.000.000 dollars. Brasil, China, Russia and India are dancing on the floor.

Domnique says that the world will keep buying US Treasuries.....

US Administration must feel so happy with that or may be Not?

[medved]

Re: Treasuries cracking now: "financial Krakatoa"

I don't understand how the treasuries can continue to crash hard here, if the USD turns around and starts heading sharply north all over again.

IMHO, this happens because:
A. Somebody keeps buying tons of USD/selling other currencies (wow! how unexpected !).
B. Most of the treasuries purchased are at the shorter end of the curve. This is really something new.

The advice I'm getting says the stock markets have a "moderate" 10% decline across the board, but the commodities, gold / silver, and all these inflation plays are going to get taken out to the woodshed in the next few weeks and done in something ugly. USD is bruited to be about the only thing to strengthen. And the advice I got is it is going to shoot up as much as four dollars in one to two weeks here, when it turns.

USD going back up to 90 on the index? Strange freaking world. This action could last for months and months IMO.

This is about the right time for the annual gold takedown. For the last 5 years I never missed the opportunity to trade it. OTOH, I don't expect a very big drop, managing gold price becomes harder every year.

[*T*]

Re: Treasuries cracking now: "financial Krakatoa"

NOT A JOKE
Dominique Strauss-Kahn anounced that for the first time IMF starts to sell SDR denominated Bonds amount? 500.000.000.000 dollars. Russia anounces the purchase of 10.000.000.000 dollars. Brasil, China, Russia and India are dancing on the floor.

Domnique says that the world will keep buying US Treasuries.....

US Administration must feel so happy with that or may be Not?

Good catch!

http://www.lse.co.uk/UKMoneyNews.asp...rough_sdr_bond

http://www.mb.com.ph/node/200310

http://www.cnbc.com/id/30674441/

Hu said China had been buying gold in its domestic market over the past five years, but had only recently refined this up to a standard high enough to count as a reserve. She said China would keep markets informed of further increases.

"We will continue to announce our gold reserve," Hu said.

[Slimprofits]

Re: Treasuries cracking now: "financial Krakatoa"

David Rosenberg notes this morning that this (spread) presents a tremendous buying opportunity for the banks sitting on $1 trillion in cash reserves and he fully expects the buying to commence.

[ricket]

Re: Treasuries cracking now: "financial Krakatoa"

David Rosenberg notes this morning that this (spread) presents a tremendous buying opportunity for the banks sitting on $1 trillion in cash reserves and he fully expects the buying to commence.

But why would they use the cash reserves to buy a future obligation to receive those cash reserves (plus interest) in a potentially highly inflationary environment? The value of their future cash payback could potentially be worthless by the time they get it back. Why would they not just purchase other things of real value, versus something that are highly suspect now?

[jtabeb]

Re: Treasuries cracking now: "financial Krakatoa"

But why would they use the cash reserves to buy a future obligation to receive those cash reserves (plus interest) in a potentially highly inflationary environment? The value of their future cash payback could potentially be worthless by the time they get it back. Why would they not just purchase other things of real value, versus something that are highly suspect now?

Because cash earns nothing. And if we hit the "next leg down" buying while yields are high and prices are low should give them quite a bit in capital appreciation over the intermediate term (2-5 years or so).

[ricket]

Re: Treasuries cracking now: "financial Krakatoa"

Because cash earns nothing. And if we hit the "next leg down" buying while yields are high and prices are low should give them quite a bit in capital appreciation over the intermediate term (2-5 years or so).

It only earns nothing if no one does anything with it and it just sits there. But with the absolute possibility of continued currency debasement, wouldnt a "smart" investor buy something that has a higher chance of it's real value staying flat (or even going up) versus a "fixed" income instrument such as Treasury bonds that are continually being issued and diluted, thus continually chipping away at the real value of them?

Why would you loan someone Federal Reserve Notes for x amount of time, when the chances of that asset depreciating greatly during that time frame are much higher than if, say, you bought gold (since no one can print gold out of thin air --so it's real value will stay more or less the same)? What motivation would any rational seller have to do such a thing?

Would you rather loan someone cash to buy a used car that could break down any day or some gold?

[Guest]

Re: Treasuries cracking now: "financial Krakatoa"

This is about the right time for the annual gold takedown. For the last 5 years I never missed the opportunity to trade it.

Yes Medved, it is not "behaving according to script" just yet however.