2.50 10-year

Water Cooler
#1

Anyone else worried about breaking 2.50 on the 10-year? Economy or safety from equities?

#2

Buy TBT?

#3

I wouldn’t say I’m worried, but I didn’t think it would come down this far again. Our 3.50 end of year forecast isn’t looking so hot.

#4

I feel like I should get a mortgage or something.

#5

All time market highs and 2.50 on 10s. What the hell is going on?!

#6

not buying it @ 2.50 b/c i think its high, but definitely not shorting it. doesnt seem like there’s a whole lot of reason for it to stop either.

  1. cold war pt II keeping it down

  2. potential ECB QE

  3. shit inflation in Euro & US

  4. seemingly overpriced/topped out equity prices

  5. lack of bond mkt supply bidding prices up.

i dont think i see in 2 in the near future, but a 3 sure seems like its becoming more and more out of the picture for 2014

#7

3.50? 100 basis point move in 6.5 months. Wow.

#8

The past four years companies in the US have been buying back 40B a month of stock on average. What is going on is management is taking cheap money and plowing it into reducing share count to inflate their bonuses.

#9

That 3.5% target was more realistic when rates were 3.10% at the beginning of the year…

Anyway, the Fed does not react to stock prices as much as economic data. So stocks can be high, but the Fed will do nothing new unless GDP growth, employment, or inflation change.

I guess a lot of people thought the Fed would raise rates quickly. Hence, the increase in rates in 2013. However, now people realize that the Fed has no real reason to stick to an accelerated schedule. So, these high rates expectations have unwound.

#10

where do you guys think 10-yr treasuries top out at the end of this cycle?

#11

Whenever Belgium says so…

http://www.zerohedge.com/news/2014-05-15/russia-dumps-20-its-treasury-holdings-mystery-belgium-buyer-adds-another-whopping-40

#12

Hard to be optimistic about growth with a 2.5 10 year.

#13

“Belgium”

#14

US companies who don’t want to pay taxes but want to park their money in dollars anyway?

Google, Apple, Pfizer (since AstraZeneca deal may fall through).

“Belgium” in quotes reminds me of Douglas Adams.

#15

^ That “Belgium” story doesn’t make much sense to me. Is it a Belgian domiciled account that is buying, some guy asking Belgium the state to buy on his behalf or something else? Forgive my Fed ignorance.

#16

The buying and selling is done through a Belgian custodian. So, some Belgian company operates accounts that ultimately belong to some foreign entity. Let’s say you have a secret Swiss bank account with $1 million. We will say that Switzerland owns $1 million USD, but you are the actual owner.

#17

3.50 was our call at the end of 2013…

Rates have moved 100bp in a shorter period of time, but I’m not seeing the catalyst. If inflation comes out of nowhere, it might happen.

#18

That’s what I figured, thanks. Some dude dropped some serious coin into Bank van Brussel and told his rep Tin Tin to buy some Treasuries. Got it.

#19

Yes, “some dude” - let’s call him Vladmir P., no that’s too easy. How about V. Putin?

#20

Too many people here are underestimating the deflationary/disinflationary era we are in. Growth will not be above 2% for the next decade.

The D word (deflation) will be the topic of conversation next year. And it will start in Europe and Japan.