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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: The Ox who wrote (20316)	11/8/2017 4:31:34 PM
From: Don Green	3 Recommendations Recommended By John Pitera Ron The Ox Respond to of 33421

Great Post is a market that has essentially sustained itself through cannibalizing on itself, binging on cheap credit to finance trillions of dollars of stock buybacks, even as these same companies barely improved their productivity at all. This all reminds me of the final few mins of the great SC-FI Classic Forbidden Planet ( 1956) where the Krill computer melts down cannibalizing itself CLASSIC movie and great sounds! youtu.be monsters from the Id https://youtu.be/IYFr3UyVpRA

To: The Ox who wrote (20316)	11/9/2017 1:29:50 PM
From: John Pitera	1 Recommendation Recommended By roguedolphin Read Replies (1) \| Respond to of 33421

Flat Yield Curve Could Be Supercharged If Key Marks Are Breached By Brian Chappatta November 8, 2017, 11:41 AM EST Updated on November 8, 2017, 2:35 PM EST BMO eyes potential break of 200-day average at 2.31% Breaching that level may point to 2.25%, Lyngen says Bond traders riding the U.S. yield curve flatter may want to buckle up: The trend could be on the verge of picking up some serious momentum. The Treasury’s auction on Wednesday of $23 billion of 10-year notes drew the strongest demand in eight months, a signal that investors were content with a 10-year yield that’s right around its 2017 average. That appetite may bode well for the curve-flattening trade that’s driven spreads to the narrowest levels in a decade. What the Flattening U.S. Yield Curve Is Telling Us go to website to see video bloomberg.com The sale *left the maturity hovering close to its 200-day moving average of about 2.31 percent.* Should the yield fall below that key technical level in coming days, BMO Capital Markets strategists see a clear path lower to 2.25 percent. Treasury futures are also testing the *final Fibonacci defense* of last month’s selloff, which, if broken, could signal gains ahead. “The broader information within the auction results suggests strong demand for the new 10-year, even at these levels, which is consistent with the flattening,” BMO’s Ian Lyngen said in an interview after the sale. “I don’t think that the broader flattening move has completely run its course.” The yield spread from two to 10 years fell below 67 basis points Wednesday, reaching the smallest in a decade and down from 84 basis points two weeks ago. Spread StreakWith two-year yields likely holding steady as traders brace for an expected Federal Reserve rate hike in December, a decline to 2.25 percent for 10-year yields would probably flatten the curve by at least a few more basis points. That could extend a streak that’s lasted nine days, the longest since 2015. The Treasury will also auction $15 billion of 30-year bonds Thursday. George Goncalves at Nomura Securities pointed out that last week’s Treasury refunding announcement, which favored increasing sales of shorter-maturity debt to fund deficits, could lead buyers further out the curve. The 30-year bond is also flashing signs of being close to a technical breakout. The 10-day moving average of the yield crossed below the 30-day average Wednesday. In the three times that’s happened since the Fed raised rates in March, it’s preceded a rally. A well-received auction Thursday could confirm that trend. “The power flattening of the yield curve is richening long end both outright and on the curve,” Goncalves, head of Americas fixed-income strategy at Nomura, wrote in a note. And yet, “the lack of macro events and a persistent low vol environment is also encouraging more duration taking.” No matter how you slice it, everything is coming up flat for the Treasuries market. — With assistance by Sejul Gokal ---------------------------------------------------------------------------------------- the thing about a flat yield curve is you DO NOT want to see it Invert where short rates are higher than long rates... that creates a negative cost of funding for banks, financial companies.... it messes with insurance company numbers, Re Insurance. The entire banking repurchase market only makes money when you have positive funding costs of longer term debt assets on your balance sheet.... If you are burning up your free cash and have negative cash flow from your funding operations..... you are lossing money... Banks are supposed to make money.... the old joke of we lose money on every transaction but make up for it on volume does not apply..... you can not scale up chase flow.... it become cash burn up. Tesla has had to deal with cash burn issues. that's why stockcharts.com has the dynamic yield curve going back to 1998 or so and you get to see what the US curve looks like and how it inverted before the .com collapse of 2000. John ------------------------------------------------------------------- Bill Gross and BlackRock Ponder Flat Yield Curve's True Meaning By Brian Chappatta November 5, 2017, 12:01 AM EDT Updated on November 5, 2017, 9:43 AM EST bloomberg.com