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The treasury curve has just imploded, with the 10Y, a massive outlier (especially in a 2s10s30s curve), just hitting a record steepness. The 2s10s just broke the previous wide of 273 bps and at last check was trading at 275 bps. Stocks, as expected compliments of the mysterious Spoos (in)visible hand, still defying gravity.
Guys, this is the start of the bond market dislocation that I have written about for the last two years. It may stop or it may accelerate, but this much is certain - even if it stops here the dream of a 4% mortgage that Bernanke has hawked as the "key" to housing stabilization is not going to happen.
You saw that right - the 30/fixed is now being quoted at 6.5%, up nearly 30% in one day.
Wall Street's rally is going back on hold as investors worry about how much the government is borrowing. Stocks turned lower Wednesday afternoon, sending major indexes down about 1 percent, after trading mixed earlier. Prices for the benchmark 10-year Treasury note slumped, driving its yield up to 3.66 percent from 3.55 percent late Tuesday.
Kilgore: I love the smell of napalm in the morning - Apocalypse Now
“S&P 500 at 870 will be the floor,” Landesman told CNBC. “It’s not very far from here and that makes the upside/downside risk/reward potential of the markets very attractive.”
He said he is a fan of the cyclical sectors.
Originally posted by warrenb
This kind of news makes me wish it was really hot outside and that I had a slip-n-slide and a few cases of beer to play with.
By the way, this makes the payment for a $200,000 note at 5% worth only $170,000 at 6.5%.
Bluntly: Bernanke's screwing around just cost you 15% of the value of your house IN ONE DAY.
When the Treasury Market dislocates risk premiums go to the moon and EVERY sort of duration credit gets more expensive all at once.
The market calls all bets, Bernanke went all-in with 2-7 off suit, the flop came up A-A-K and the bond market is grinning.
Anyone care to bet what the bond market has for hole cards?
This will translate into corporate funding costs and when it does you're going to see a staggering impact on Corporate America, triggering another monstrous wave of bankruptcies.