Friday, September 10, 2010

10 year yield compaisons – sovereign , muni, and commercial examples

Debt Man’s Curve: It's No Place to Play

imo quite a good summary chart of differences between IRs across a broad spectrum of issuers. Note where the UK and US is and the author's comments. Something to watch as the "bond bubble" erm bubbles / pops.

Posted by techieman @ 09:36 AM (1074 views)
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7 thoughts on “10 year yield compaisons – sovereign , muni, and commercial examples

  • Yup. Once I’ve got this general election expenses reporting out of the way, I’ve got to get back in to short selling 30 year treasury futures. All good fun.

    I also note deflationist sub-tone in that article – always a topic to get the crowd going 🙂

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  • I also note deflationist sub-tone in that article – always a topic to get the crowd going 🙂

    Yeah, but the elliott bunch have always been deflationists – so no real surprise there. They are the ultimate deflationist lobby.

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  • the point they make in general is that the yield on bills wouldnt be so low if there was a threat of high inflation / hyperinflation in the us uk and japan. there is a video that goes with this in which they actually say that such a scenario is unlikely to happen in the next two years. that sounds about right to me – but as we discussed below thats only a probability.

    in my view a high one – but in others the high inflation scenario including loss of confidence in the currency etc is a higher probability within the next two years. Le crunch for example said the dollar will collapse in the next 5 months. but then again he said it was going to collapse imminently just before it ramped! fair enough – the market makes a fool of all of us from time to time. its the tone of ” a kid could understand it” that i object to – especially when it turns out the boot was on the other foot!

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  • “Yeah, but the elliott bunch have always been deflationists ” – thats actually not true hpw.

    Prechter – and i know cause i got the frost and prechter book – wrote in 78 that there was going to be the biggest boom in shares that we will ever witness. that there would be manias in all asset classes and that such classes would inflate and credit would expand.

    in the book itself he calculates a turning point as 1987 he says that the bull market – from that time (78) the market was around 700 Dow and he was one of the few bulls around. His idealised pattern was that the market would increase 5 fold to 3700 by 1987, but then 1987 would be the top.

    of course 1987 was an important top but not THE top. the final spurt up “extended” to give the actual top in 2000 (yes i know thats not the nominal top) but i am not going into why that he still classifies this as a top. his excuse for getting that wrong was that he didnt consider how much credit would be inflated. again he has a point – i mean in 1978 who would have thought that M3 would increase so much?

    since 2002 he has predicted there would be more expansion in credit but that the higher it went the more likely to be a complete collapse. he then called the top in real estate in 2005, the nominal stock market in november 2007, and an interim low in the markets in 2009(although interestingly he maintains that would have been the same had the governments not stepped in – personally i dont know how he can say that ).

    he called in march 2009 for a move back up in the s&ps from 670 (where they were then ) to 1000 – 1100. Again at that time most people thought that was it. he also said that at that time the dollar would fall but that we would see renewed strength in the dollar once the move up in stockmarkets had petered out. he also issued a report in august 2010 saying that the rebound top was in and that there would be falls below the prior low of 666 s&p and the actual low would go far below that, he also issued some calculations that a confluence of dates would be 2016 when the bottom would be in.

    so in summary he hasnt always been a deflationist or permabear, although admittedly he is now and has been since before there was some deflation.

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  • Hi TM

    You wrote – “Something to watch as the “bond bubble” erm bubbles / pops.”

    I am having a hard time imagining this as a bubble that can pop. It might have got a bit bubbly so a correction is likely. By this I mean an orderly correction rather than sovereign solvency coming into question. IMO bonds seem well supported given how much uncertainty there is in the market and likely to be for some time. If there really are solvency questions the Fed can withdraw support for other markets it is propping up causing people/pension funds to flee back into bonds which are effectively cash, perhaps even safer than cash.

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  • Hi MG – hope you are good .

    previously hpw had quoted a bond bubble. to be fair lots of people are also quoting the same including my mate daneric. also ewi are differentiating between munis and to an extent tbonds but in particular tbills. i really have no feel for how much – if at all – of a bond bubble we are in which was why i used the phrase above.

    its all very difficult at the moment – i was short the S&Ps @ 1070 (limit overnight) and felt no pain at all. down to 1039 – i liquidated most @ 1047 [which at the time i thought was a mistake] and had a sell on stop order back below 1035 – as i thought once it breaks there its off to the races. i am still holding 10% of that position – the 1070s, as i really think this is just a bit of a suck in. of course it could be more and more of a suck in and i could be more and more stupid looking! :). Next week is when i think we have the start of the selling, but perhaps after an even bigger short squeeze.

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  • Hi TM. Yes well thanks had a nice camping holiday with the family on Isle of Wight. Hope you are well.

    I have been trading mainly EUR/USD and doing quite well with the spread betting platform so far. Started small to build up my confidence but there is 50% more in my account right now than there was when I started a month ago. I have no open positions but plan to short EUR at 1.2764 up to 1.2772 again. I have done this successfully this week as it bounced between 1.2764 and 1.2665 very predictably at certain times of the day. I have tended to lose money during corrections, so this has been the exception. EWI recons it might pop up to 1.2772 to end the correction so I hope to hold the positions into the 3rd wave.

    I have traded EUR/USD because the spreads are very tight. I have held off shorting S&P so far but will probably venture in if 1040 gives way in an impulsive way. Also plan to short gold at 1230 down to 1205.

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