Treasuries cracking now: "financial Krakatoa"

[charliebrown]

Re: Treasuries cracking now: "financial Krakatoa"

good looking to buy!

[jtabeb]

Re: Treasuries cracking now: "financial Krakatoa"

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?

Banks don't give a flying fuck about real returns, their balance sheets are all "nominal". Yes we give a shit about real returns, banks just need to be "nominally" profitable, hence they ARE NOT rational actors. (Lucky for us!)

[jtabeb]

Re: Treasuries cracking now: "financial Krakatoa"

good looking to buy!

For those of you who play real money in this trade, I'm sorry but that's the dumbest thing ever. If "it" ever happens and you are still waiting to buy physical, well, I guess you'll know how fucked you are, won't you.

IMHO, buy a big pile of the stuff, as much as you can, add to the pile as much and as frequently as you can.

Simple, no headaches, no risk (you have guns too, of course, right?)

Did I mention that I'm up 300% in 9 years doing this, NO, Okay well I did now. I'm a simple guy and when SIMPLE generates that kind of return, well, let's just say I look a lot smarter than I actually am, just for keeping it SIMPLE.

V/R

JT

[WildspitzE]

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?

There are two ways that they would get could get "paid back" - (a) if they hold it to maturity or (b) they trade out of it at par or with a premium.

Banks aren't buy and hold investors, at least not with treasuries, so ignore (a).

You're also forgetting that the banks are insiders. Protecting the banking system is the FED's number one mandate - no matter what you read. The effort within this mandate is to show profits and rebuild capital ASAP.

Thus:

(1) using the money that the us taxpayer has lent them for free (including via AMB), to lend it to the us taxpayer (via treasuries) is a straight forward arb to show paper profits. A steepening curve makes this arb much more attractive (to lock in) as long as the cost basis holds. That said, it's up to a point that they can let this float upwards before the banks see it affect losses on the other assets.

They are also dealing in billions and billions of dollars, small spreads in large quantities adds up.

(2) could this also be a set up for a pump and dump? They can earn easy money re: (1) above, and then have a huge trading gain?

The treasury market is not a market, it's a rigged game at a casino. Tread carefully.

[charliebrown]

Re: Treasuries cracking now: "financial Krakatoa"

OK, who is buying treasuries today?? The fed? 10 yr Rates down 21 basis points.

[blazespinnaker]

Re: Treasuries cracking now: "financial Krakatoa"

OK, who is buying treasuries today?? The fed? 10 yr Rates down 21 basis points.

Obviously the fed is out in force. Pretty hilarious.. Though you have to wonder why they don't just try to jawbone it down rather than use their money.

[Mashuri]

Re: Treasuries cracking now: "financial Krakatoa"

Most likely the next FOMC meeting or the the one after will result in an announcement that the Fed is purchasing 30Y treasuries. I'll have a buy stop order slightly above the current futures price to take advantage of the resulting spike. Of course, then I'll take profits and short the market as it will start to tank soon after.

[metalman]

Re: Treasuries cracking now: "financial Krakatoa"

Most likely the next FOMC meeting or the the one after will result in an announcement that the Fed is purchasing 30Y treasuries. I'll have a buy stop order slightly above the current futures price to take advantage of the resulting spike. Of course, then I'll take profits and short the market as it will start to tank soon after.

and gold will rise some more.

fed's theme song...

[jpatter666]

Re: Treasuries cracking now: "financial Krakatoa"

Most likely the next FOMC meeting or the the one after will result in an announcement that the Fed is purchasing 30Y treasuries. I'll have a buy stop order slightly above the current futures price to take advantage of the resulting spike. Of course, then I'll take profits and short the market as it will start to tank soon after.

Yep. I got stopped out of my small TBT position. After the Fed forces the rate down some more (if they do) I'll load up again.

[charliebrown]

Re: Treasuries cracking now: "financial Krakatoa"

Does this explain treasuries up, dollar down today?

[jpatter666]

Re: Treasuries cracking now: "financial Krakatoa"

According to David Fry, someone hit the market with a bunch of buy orders right at 3:30PM. Obvious jamjob to force shorts out and hit stops (which it did for me).

Could have been end-of-the-month tape painting.

[globaleconomicollaps]

Re: Treasuries cracking now: "financial Krakatoa"

Yes, you said what I meant. FDI UP not down. Sorry for the confusion.

This was from a few days ago, but i just noticed it. this is the FDI:

http://users.zoominternet.net/~fwuth...FFF/FDI800.png


it does look like it is about to go DOWN not UP. did you mean that the black line will go UP soon?

-global

[Guest]

Re: Treasuries cracking now: "financial Krakatoa"

Global - the original comments were indeed in reference to the FDI going UP, not DOWN. I suspect when this chart is updated it will have a nice extra little leg down for the past week too!

However FDI going up was I think what Jtabeb meant. Certainly the thesis of any sharply rebounding FDI is under pressure at this point with the USD very public "fainting spell" that's occurring.

But we really need another month or two to see which way this thing is resolving. The overwhelming majority of bets are on the FDI continuing down from here. And indeed it certainly should, and could. And at present it most certainly is! That really is the rational call at this time - so if this were a pony race FDI CONTINUES DOWN would own by far the best odds.

The FDI turning sharply UP from here, in the pony race analogy would be the scrawny looking salt & pepper horse with the bow legs, that somebody drafted in as a last minute pick.

She may be a real runner, but then again she does look a little gimpy, and may wind up last in the race. She was a "pro-forma" entry for the FDI CONTINUES UP thesis. So if the derby favorite wins, the band will be striking up the tune - "Inflation, right here, and right now".

And if this scrawny bow-legged salt & pepper horse wins by some peculiar twist of fate, we can all go back to the Alice in Wonderland world of the soaring US dollar where-everything-else-was-crapping-out.

This was from a few days ago, but i just noticed it. this is the FDI:

http://users.zoominternet.net/~fwuth...FFF/FDI800.png


it does look like it is about to go DOWN not UP. did you mean that the black line will go UP soon?

-global

[rogermexico]

Re: Treasuries cracking now: "financial Krakatoa"

According to David Fry, someone hit the market with a bunch of buy orders right at 3:30PM. Obvious jamjob to force shorts out and hit stops (which it did for me).

Could have been end-of-the-month tape painting.

Why not hold tight. If you can do it with gold why not hang on?

you don't have to trade your shorts

Gravity is your friend. The fed is fighting gravity.

[jtabeb]

Re: Treasuries cracking now: "financial Krakatoa"

This was from a few days ago, but i just noticed it. this is the FDI:

http://users.zoominternet.net/~fwuth...FFF/FDI800.png


it does look like it is about to go DOWN not UP. did you mean that the black line will go UP soon?

-global

YES, black line go up. Again sorry for the confusion in the first place on my part, and again thanks to Luke for correcting me.