Thursday, September 22, 2011

30 year treasury yield plunges to 2.85%, Markets getting battered

Markets getting battered again but the big news is the plunge in US Treasury yields. A few weeks ago I called for a 2 handle on the 30 year and lo and behold here it is with the 30 yr trading like the 10 yr would LOL. 10 yr yields are at a pathetic 1.75%. We may possibly see even LOWER yields on treasuries confirming that the US is going "Japanese" with low or no growth, low interest rates and falling asset values. Better to go Japanese as opposed to going "Greek" with Greek 1 year bonds yielding an astronomical 100%. This is what happens when a country goes broke, when no one wants to lend you any money.

Gold and silver and getting the shit kicked out of them as well (metals on sale!) with crude trading at $80 this morning. Markets are still within range with the lower range at 1100 on the S&P 500. If we break 1100 then its geronimo time with 1000 being the next resistance level. The Bernank let markets down when he failed to announce more monetary heroin leading the markets to tank shortly after the FOMC minutes. The next fed minutes come out in 6 weeks from now and with Europe in the shitter there is little upside catalyst for the markets until then.

As big of a basket case the US is it still has the world reserve currency so in times of deflation the dollar rockets higher. Right now the USD has broken out to a 7 month high and if the deflationary pressures continue to the dollar can easily rocket even higher, possible seeing 90 on the USDX.

6 month chart of the US dollar index. The latest pop is substantial.




That would be great as crude oil will plunge alongside with the metals granting us a sweet buying opportunity. In the end, however, policy makers will follow the path of least resistance and will press the PRINT button when things get too difficult. I expect QE3 to be announced no later than January 2012.

On a final note, I find it despicable that student loan borrowers are locked in at 8.5% on their loans while homeowners can refi at pathetic 4% rates. With the 10 yr treasury at 1.85%, there is no reason why a 10 yr student loan can't be adjusted to 4%. Seriously, the congress critters need to wake the fuck up and let people refi at these incredible rates.

5 comments:

  1. Seriously your generation never learned the first rule of getting things done. Power only responds to fear. Congress and power do not fear your generation or the students. SLABS rule.

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  2. I heard Obama address the U.N. recently. It seems that Obama's English is much more polished when addressing the U.N. than when he addresses the domestic black community. Our leaders are just empty shells, sock puppets. It will all end quite badly.

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  3. this pile into the dollar is nothing but confirmation bias or belief perseverance or some shit - these monkeys fanning their nuts with paper money and playing angry birds with the digital stuff are getting shat on by a black swan, got no idea what to do, so are clambering aboard the flaming raft known as the greenback, setting sail on a sea of green. gasoline.

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  4. 1) I told you so, about a year ago. Gold is just a commodity, and all the gold bug worship was never about anything but superstition and, perhaps, certain people (Glenn Beck, ahem) making money by blowing up a bubble.

    2) Remember all those dire warnings about hyperinflation? What happened to that?

    I'm pointing this out bluntly because I'd like to make this point: Do you think, is it just barely possible, could it BE, that the conservative dogma that led us into the recession is also wrong about how we should get out? Maybe the Larry Kudlows and Glenn Becks and Wall Street Journal editorial boards are just making money at your expense? They tell you what to think, and it seems to be working out very well for them and not as well for you. Just saying...

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