• 17 hours The True Cost Of Opportunity In America
  • 23 hours Why Investors Shouldn't Ignore Gold Stocks
  • 2 days Facebook Scrubs Over 2 Billion Fake Accounts
  • 2 days Dow Scrambles To Avoid Fifth Straight Weekly Loss
  • 3 days Is This The World’s First Truly Democratic Stock Exchange?
  • 3 days India’s Wealthiest Set To Hold $23 Trillion By 2028
  • 3 days First Quarter Profits Slip For World's Top Oil Companies
  • 3 days The Yuan May Be China's Biggest Weakness
  • 4 days Hedge Funds Having A Banner Year
  • 4 days Disney Heiress Asks “Is There Such A Thing As Too Much?”
  • 4 days BHP Turns Bullish On EVs
  • 4 days Investors Turn Bullish On America’s Nuclear Decommissioning Business
  • 5 days The $90M Inflatable Rabbit Redefining Modern Art
  • 5 days Huawei’s Fate In The Air
  • 5 days Tesla Slashes Prices Again
  • 5 days The Modern History Of Financial Entropy
  • 6 days Italy’s Central Bank Embraces Sustainable Investing
  • 6 days Trump Lifts Metals Tariffs To Cool Simmering Trade War
  • 6 days Researchers Push To Limit Space Mining
  • 6 days Could China Start Dumping U.S. Treasury Bonds?
How Millennials Are Reshaping Real Estate

How Millennials Are Reshaping Real Estate

The real estate market is…

Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

Strong U.S. Dollar Weighs On Blue Chip Earnings

Strong U.S. Dollar Weighs On Blue Chip Earnings

Earnings season is well underway,…

  1. Home
  2. Markets
  3. Other

US Treasury Bull Market Over?

In the wake of amusing calls by various Fed presidents about impending rate hikes, Curve Watchers Anonymous has received numerous questions about the US treasury bull market.

Specifically, readers want to know "Is the bull market over?"

From my perspective, the bull market is not over if yields on the long-end of the curve (10 and 30 year duration) make new lows. So, how likely is that?


Yield Curve 2001-Present

US Yield Curve Monthly Charts
Larger Image


Treasury Bear Proclamations

For going on two decades, US treasury bears have called US treasuries "certificates of confiscation".

Treasury bulls laughed all the way to the bank.

There were some steep selloffs in 2003, 2009, and 2012 leading bears to proclaim the end of the bull. 2015 proved the 2012 proclamation was wrong.

Undaunted, the bears simply proclaimed 2015 the end of the bull market.

Then, with a parade of Fed presidents touting rate hikes for over a year, and with more economists piling on those forecasts, the bears were sure they were finally right.

"Victory at Last!", thought the bears. But here we are, flirting with new record-low yields on both the 10-year note and the 30-year bond.

And if the economy is sliding into recession (or already in one), or even if the economy simply stalls, the treasury bears will be proven wrong once again.


Yield Curve Flattens

On Friday, in response to a horrific jobs report, yield on the 30-year long bond fell 12 basis points to 2.52% and the odds of a rate hike this year shifted from July to December.

Note the action at the long end of the curve (blue arrows). The trend has been distinctly lower despite all the Fed hawk-talk.

The flattening of the yield curve (short end rising while long end sinks) is not favorable for bank profits or increased bank lending.


Related Articles

  1. Horrendous Jobs Report: Fed Hiking Not: Payroll Jobs +38K, Employed +26K, Labor Force -458K, Revisions -59K
  2. Four GDP Estimates: New York Fed Nowcast Up to 2.4% (I'll Take "The Under"); Modeling Error on Unemployment Rate?
  3. Construction Questions: Construction Employment Declines Back-to-Back First Time Since May 2012; Questions of the Day
  4. No Hikes for Years?! Rate Hike Odds Collapse; Fed's Evans Discusses "Delays for Years"

Mish Yield Curve Tweet

 

Back to homepage

Leave a comment

Leave a comment