• 271 days Could Crypto Overtake Traditional Investment?
  • 276 days Americans Still Quitting Jobs At Record Pace
  • 278 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 281 days Is The Dollar Too Strong?
  • 281 days Big Tech Disappoints Investors on Earnings Calls
  • 282 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 284 days China Is Quietly Trying To Distance Itself From Russia
  • 284 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 288 days Crypto Investors Won Big In 2021
  • 288 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 289 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 291 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 292 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 295 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 296 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 296 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 298 days Are NFTs About To Take Over Gaming?
  • 299 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 302 days What’s Causing Inflation In The United States?
  • 303 days Intel Joins Russian Exodus as Chip Shortage Digs In
  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