Bond market "dislocation"

For those who are still in the stock market, one of Denninger’s predictions was that the bond market would signal when investors were giving up on Bernanke’s policies. by sharply hiking rates.

Today, the Treasury auction went badly, and mortgage rates shot up significantly. Depending on which bank site you look at, anywhere from 0.5% to 1% in a single day. Right now, it looks like tomorrow the rates will go higher again.

There’s a double-inverse (ultrashort) Treasuries fund, symbol TBT, which has done very well lately. Also a 3X short, which I believe is TMV. The 3X is a fairly new fund; I didn’t know the symbol before today. I’ve been wasting my time buying the merely 2X short TBT instead. :slight_smile:

Bernanke may try to fight it by buying more Treasuries himself to drive down the rates. If he goes too far, we get hyperinflation. If he gives up, the housing market and commercial real estate market will tank, as they both need to do. (For those of you who haven’t been in the U.S. lately, the sheer number of empty storefronts is sickening. A total waste of money to have built them, and more are being constructed as money just keeps on pouring down that toilet.)

Tomorrow (already “today” in Taipei), there’s an auction on seven-year notes, but the real trouble may hit next week when thirty-year notes and another longterm one (ten-year, I think) get auctioned again. Investors are shifting to the shorter terms, so tomorrow’s might go ok, but next week’s will probably be pretty bad, unless Bernanke goes hog wild with his “quantitative easing” (a.k.a. “printing money”) garbage.

Anyway, just to let you all know that the mess continues, and things are getting worse. Have a nice day.

Thanks Squidly. I read they had they same problem at the last bond sale, but it was largely ignored.

Hey Mapo, is this the bubble in the treasury bond market that Warren Buffet alluded to?

Seems China is moving to short term treasuries… And last week even the GBP jumped agst USD… after being under 50NT$ for quite a while.

The inflation scenario seems to be increasingly likely… and 100% is predicted in the years to 2020. That’s a huge amount.