"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput

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Tuesday, May 28, 2013

Ten Year Treasury Yield Surges to a 14 month High

Take a look at the following chart of the yield on the Ten Year Treasury Note. It closed at 2.135% return today, the best level since the first week of April, 2012.

While I personally believe that the economy is too weak to withstand higher interest rates for a prolonged period of time, all that matters right now is money flows. Money is flowing out of safe havens and flooding into equities in search of Yield, Yield, and more Yield.

The Central Banks of the West, and Japan, have created a RISK FREE environment for equity traders and have unleashed a full fledged mania in the process. Mark this well as you are seeing what happens when moral hazard is on full display.

I have said it before here and will say it again, the only risk in the mind of hedge fund managers, institutional fund managers and pension fund managers, is the RISK OF NOT BEING IN STOCKS.

I want to see if this note can take out the dotted green resistance line that shows up near the 2.30% level; that would be a big deal in my view.


  1. Thanks for the hint. It's getting very interesting indeed. Can't wait to see what happens when we cross that dotted green line.

  2. I'm in the middle of a refi - and had to lock today. I was waiting for some consolidation, but couldn't risk it not happening.

    I think you got it right Dan. The players at the casino have reloaded with a fresh set of chips. Game on!

  3. In Asian trading as I write this, 0.32%, 2.22% and 3.36% on the 2, 10 and 30 year. Will be interesting to see if it holds tomorrow morning.

  4. "the only risk in the mind of hedge fund managers, institutional fund managers and pension fund managers, is the RISK OF NOT BEING IN STOCKS."
    Yes...not because they don't know about the risk...but because they are even more afraid about the risk of losing their customers by missing the rallye. Lol. Everything will be ok...
    - silver close to 22$ support again.
    - gold still capped Under median of daily pitchfork (1390) and downtrend channel.
    let's see how they close the week / month...

  5. I am still following the Chinese Yuan vs USD. Yuan touched a new high vs USD yesterday (rebounding a little today)
    The yield on the 10Y has started to rise after the decision by China to let the Yuan floats more freely and with a broader range.

    I have mentioned the link here before. What I think is happening is the fact that the USA is starting to be afraid of the rise of the Yuan and the possibility (soon??) to see the Yuan becoming the currency "to be" and the huge decline in the USD when big players start acting. The fact that more and more bilateral monetary agreements are signed between China and other countries (last one being New Zealand)could be forcing the US to raise interest rates (even if this could kill the US economy) in order to protect the USD.


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