This is complex. Reading about FTDs. Leading up to 2008 recession, members of Congress invested in hedge funds that shorted Treasury bonds. By December, FTDs passed $2 trillion. Currently, FTDs at DTCC in US Government Agency Bonds are at a 52-week high. https://www.dtcc.com/charts/daily-total-us-treasury-trade-fails#qna
My suspicion is that this data is more about a short-term panic, given the debt ceiling stand off. Also, hard to imagine how any of those Congress members made money if they were shorting Treasuries into 2008 - as far as I can tell, Treasuries enjoyed strong gains from mid-2007 all the way through the 2008 Financial Crisis
Ross, you wrote, "And yet, despite inflation running at over 5%, the 10-year yield cannot manage to clear 2% on the upside. The bond market is firing off stronger warning signals than those in 2007 and early 2008." Could you elaborate here? I'm now keeping an eye on $TYX. Who, specifically, do you mean by "the bond market" ... and why, in the face of inflationary pressures and resource shortages are bond yields not rising? Who is truly in control? (Thanks.)
It's a great question, Stephen. Probably the single most important question in today's market - whether today's inflation turns out to be a new secular trend, or a transitory blip as all previous inflationary spikes have been since 2008. Attempting to answer this question will be the focus of a great deal of research I publish in the coming weeks. Much too complex a topic to answer here, but stay tuned, the deep dive is coming!
Wow. That is a world class report. For new subs, that really sets the stage for trading the impending market. I'm really impressed, Ross. Your thesis is strongly supported and your writing is clear and concise. Going to learn a lot following your newsletter! A+.
This is complex. Reading about FTDs. Leading up to 2008 recession, members of Congress invested in hedge funds that shorted Treasury bonds. By December, FTDs passed $2 trillion. Currently, FTDs at DTCC in US Government Agency Bonds are at a 52-week high. https://www.dtcc.com/charts/daily-total-us-treasury-trade-fails#qna
My suspicion is that this data is more about a short-term panic, given the debt ceiling stand off. Also, hard to imagine how any of those Congress members made money if they were shorting Treasuries into 2008 - as far as I can tell, Treasuries enjoyed strong gains from mid-2007 all the way through the 2008 Financial Crisis
Ross, you wrote, "And yet, despite inflation running at over 5%, the 10-year yield cannot manage to clear 2% on the upside. The bond market is firing off stronger warning signals than those in 2007 and early 2008." Could you elaborate here? I'm now keeping an eye on $TYX. Who, specifically, do you mean by "the bond market" ... and why, in the face of inflationary pressures and resource shortages are bond yields not rising? Who is truly in control? (Thanks.)
It's a great question, Stephen. Probably the single most important question in today's market - whether today's inflation turns out to be a new secular trend, or a transitory blip as all previous inflationary spikes have been since 2008. Attempting to answer this question will be the focus of a great deal of research I publish in the coming weeks. Much too complex a topic to answer here, but stay tuned, the deep dive is coming!
Wow. That is a world class report. For new subs, that really sets the stage for trading the impending market. I'm really impressed, Ross. Your thesis is strongly supported and your writing is clear and concise. Going to learn a lot following your newsletter! A+.