It's been 234 Years since the 10-Year Bond Note deteriorated to this extent.
The United States Treasury's formation was a Year away - 1789.
9 States had ratified the US Constitution.
In order to pay for expenditures during the Revolution, Congress had only
two options: print more money or obtain loans to fund the budget deficit.
Congress became far more dependent on the printing of money, which led
to hyperinflation.
Congress lacked the authority to levy taxes - doing so would have risked
alienating an American public that had gone to war with the British over
the issue of taxation without representation for the Crown.
________________________________________________________________
The first 6 Months of 2022 have been a disaster for Bonds.
Unfortunately, it is simply just beginning.
At present, the "Disinflation Wave" is in the trade as the Media / Wall Street
ups the narrative and continues to bang the Commodity Rollover as evidence.
Typically (although we do not use History as a Guide as this is the largest
Bear Market in History, it is unprecedented as we have noted for months)
we see an 8 to 13 Month mismatch cycle for "Dis-Inflation".
Although Demand Destruction is being accelerated in Capital Stock losses,
people eat, drink, drive... consume material things required for their very
existence.
_________________________________________________________________
The most recent 4-week, 8-week, 13-week, 2year, 5-year, and 7-year auctions
were a significant failure at a time when the FED reportedly reduced their
balance sheet by $21B after a retracement for several weeks off the May 25th
outsized and front-run dump of $51B.
Meanwhile, Reverse Repurchase pools continue to swell to new all-time highs,
most recently $2.34T - earning 1.55% and safely out of perceived harm's way.
Depression concerns are clearly intensifying.
2 Year Bond Futures continue to Invert intra-day.
M1 / M2 / M3 continue to flee to the Big Lots Pool.
_________________________________________________________________
Negative GDP reinforces the Demand Destruction - Consumers will out how
Inflation peaks... Central Banks claim to want Positive Real Rates.
Consumers are rolling over, demand destruction is seeing far broader participation
as Savings / Investment / Incomes decline at the highest ROC's in decades.
This would require an outside Fed Fund Futures move, one that appears
improbable for the near term.
I'd like Ashley Trevort Twins - Seems improbable as well.
The difference is, that the odds favor my wish. The Bond Market will retrace in
select points on the Yield Curve, but ultimately the Negative real rate to
Inflation will find its Afterburner.
_________________________________________________________________
Entities are not going to step up, this is clear.
The ticking insolvency bomb fuse was lit in early 2021...
How long is that fuse?
Not long.
Equities remain the Capital stock to destroy, Housing / Alt Coins / Metals ... etal
are not long for this environment.
In order for Global Central Banks to meet their stated objectives... they'll need to
become far more aggressive.
Will they...
The United States Treasury's formation was a Year away - 1789.
9 States had ratified the US Constitution.
In order to pay for expenditures during the Revolution, Congress had only
two options: print more money or obtain loans to fund the budget deficit.
Congress became far more dependent on the printing of money, which led
to hyperinflation.
Congress lacked the authority to levy taxes - doing so would have risked
alienating an American public that had gone to war with the British over
the issue of taxation without representation for the Crown.
________________________________________________________________
The first 6 Months of 2022 have been a disaster for Bonds.
Unfortunately, it is simply just beginning.
At present, the "Disinflation Wave" is in the trade as the Media / Wall Street
ups the narrative and continues to bang the Commodity Rollover as evidence.
Typically (although we do not use History as a Guide as this is the largest
Bear Market in History, it is unprecedented as we have noted for months)
we see an 8 to 13 Month mismatch cycle for "Dis-Inflation".
Although Demand Destruction is being accelerated in Capital Stock losses,
people eat, drink, drive... consume material things required for their very
existence.
_________________________________________________________________
The most recent 4-week, 8-week, 13-week, 2year, 5-year, and 7-year auctions
were a significant failure at a time when the FED reportedly reduced their
balance sheet by $21B after a retracement for several weeks off the May 25th
outsized and front-run dump of $51B.
Meanwhile, Reverse Repurchase pools continue to swell to new all-time highs,
most recently $2.34T - earning 1.55% and safely out of perceived harm's way.
Depression concerns are clearly intensifying.
2 Year Bond Futures continue to Invert intra-day.
M1 / M2 / M3 continue to flee to the Big Lots Pool.
_________________________________________________________________
Negative GDP reinforces the Demand Destruction - Consumers will out how
Inflation peaks... Central Banks claim to want Positive Real Rates.
Consumers are rolling over, demand destruction is seeing far broader participation
as Savings / Investment / Incomes decline at the highest ROC's in decades.
This would require an outside Fed Fund Futures move, one that appears
improbable for the near term.
I'd like Ashley Trevort Twins - Seems improbable as well.
The difference is, that the odds favor my wish. The Bond Market will retrace in
select points on the Yield Curve, but ultimately the Negative real rate to
Inflation will find its Afterburner.
_________________________________________________________________
Entities are not going to step up, this is clear.
The ticking insolvency bomb fuse was lit in early 2021...
How long is that fuse?
Not long.
Equities remain the Capital stock to destroy, Housing / Alt Coins / Metals ... etal
are not long for this environment.
In order for Global Central Banks to meet their stated objectives... they'll need to
become far more aggressive.
Will they...