Trader: This Is Knife Catching At Its Best Or Worst – Depending On How You Wanna Look At It

Via Kevin Muir of “The Macro Tourist” fame Over the Christmas break, there has been a lot of chatter about this great chart from 13d Researchthat has been labeled, “the most important chart in the world.” During the past thirty years, the US 10-year yield has been immersed in a steady decline, with brief run-ups that have coincided (caused?) financial market crises. The 1987 stock market crash, the 1990 S&L crisis, the 1994 bond rout, the 2000 DotCom bubble and the 2007 housin

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One thought on “Trader: This Is Knife Catching At Its Best Or Worst – Depending On How You Wanna Look At It”

Your analysis and logic about what should happen is spot on. But I think the one element that many credit market traders may be overlooking is the changing supply mix of new issuance, and how the Treasury Secretary is currently reducing 10 to 30 year supply on a relative basis, while borrowing like a drunken sailor on the short-end since September 2017. Watch the supply mix if you have the figures. The market is very distorted because of QE, and until the long-end natural buyers go on strike to force rates higher, the yield curve is going to continue to flatten. This is the opposite of what should happen in an expanding economy, but for the fact that the Trump Treasury is changing the way the game is played in order to finance the National Debt at the lowest rates possible – at least in the near term.