Something Funny Happened on the Way to the Bond Market
Yesterday, Hal Turner reported on some strange flashing lights in the US Treasury market—huge yield spikes that came and went like lightning sprites in the night sky.
The anomalous vertical jolts suggested sudden huge moves by a massive whale in US bonds.
Something very peculiar - and VERY serious - is happening in US Treasury Bond markets. The Yields on the 2-year, the 5-year, the 20-year, and the 30-year Bonds have experienced sudden and dramatic 40bps spikes several times today.
Turner suggested the most likely cause portended serious bad news for the US:
At first, folks thought this might be a data glitch. But it kept happening. Now, the general consensus is that a VERY LARGE Bond Holder is DUMPING U.S. Treasuries and doesn’t care who sees it.
More worrying is the almost immediate return to previous lower levels.
The general consensus is that the sale of the Bonds is triggering the Yield spike (because the sale of such bonds indicates to the market they are now riskier) but almost immediately, somoene else is “buying” those bonds, thereby returning the Yield to normal.
The general consensus is that the ONLY entity big enough to be instantly buying the Bonds would likely be the US Federal Reserve. It is believed the Federal Reserve is doing this to keep the Yields at low interest.
But if this is actually what’s taking place - we just don’t know yet -- then that means someone big is DUMPING US TREAURIES and the fed is creating money out of thin air to buy them. Monetizing debt!
Keep a close eye on this. If one “whale” is dumping US Treasuries, that could start an avalanche of others doing the same thing. Faith in the Dollar could suffer greatly if this spreads….
I think China is dumping US Treasuries. (No factual basis for this belief, just my gut feeling)
And the market doesn’t have enough buyers to absorb it….
You see yields spiking and crashing violently within the same candle, over and over again.
That’s what happens when a MASSIVE seller hits a market with no liquidity.
It sounds like a battle where the Fed is doing its best to stuff yields down with emergency buys to soak up the sudden sales that spike yields to find buyers. That is pure speculation, of course, and Turner warns he has no expertise in bonds; however, only a few days before this oddity, Jamie Dimon, CEO of JPMorgan Chase, who does know a bit about these things, being the biggest primary bond dealer for the US Treasury, warned that we should be anticipating “some kind of bond crisis” is coming.
And then, today, signs of trouble started showing up in US bond yields that didn’t just flash but held with the 30-year lingering this morning above 5%:
US bond yields have crept above a dangerous level that could signal weakness for stocks
The bond market is sending a new warning to investors: don’t expect any rate cuts soon….
Markets weighed upside risks to inflation from the Iran war and raised their expectations that the Federal Reserve will keep interest rates higher for longer.
Nothing serious yet, but this cluster of phantom strikes may indicate trouble emerging. It is something to keep a watch on. I’ll do that for you because the entire national debt floats on what happens in this market, and we’re now piling on debt like there is a war going on … or three or four or five … which is all necessary, apparently, for some very important empire building because …
‘I’m ‘the most powerful person to ever live.’
