The Long Bond in Pain

What do the years 1920, 1973/74, 1980/1, 2009 have in common?

Routs in the long bond, which is currently in the largest drawdown I can find since 1900. Zeros are doing even worse. . .

Source: Global Financial Data

Comments

[BondNovice:]

what exactly does this mean? can someone elaborate on the chart?

May 29 09:04 AM

[Old Trader:]

Bond novice;

The longer the "icicle" (the blue thingies hanging down), the sharper/deeper the decline, although the most current data point doesn't look all that bad, relatively speaking. Of course, as the US government goes to the well increasingly more often to fund the deficit, that's likely to change.

May 29 10:29 AM

[Mad Hedge F...:]

It's going to have to live in a world of hurt. Just a little note to point out that my long term Treasuries short recommendation has gone ballistic, hitting a new high of $57.40, and that the futures have crashed to 116. The ten year yield has ratcheted up to 3.56%, a new high for the year, and the 30 year to 4.5%. The market is finally reading the writing on the wall. Who thought the sale of $100 billion in new paper was going to go well? The dealers are now choking on this stuff. I’m sure government agents are now scouring the country for new sources of high grade linen, the best raw material for printing new $100 bills. My calls don’t always work out this well this fast, so please indulge me, and let me savor the moment. Let the crash continue. Instead of focusing on the bankruptcy of GM, we should consider the United States government going under, as this cataclysmic move in federal debt seems to be presaging.

May 29 11:11 AM

[badScooter:]

Begs the question- Who bails out the US? The answer "Too big to fail" gets no credit, on that one.

May 29 11:25 AM

[Roger Knights:]

Too big to bail.

May 29 11:51 AM

[TU Man:]

i'd be curious to see the returns the next 12 months after these drawdowns...

May 29 12:09 PM

[Neil459:]

20 years of bad times leading to Iran and China opening manufacturing plants in the US to take advantage of the low cost of labor.

On May 29 11:25 AM badScooter wrote:
> Begs the question- Who bails out the US? The answer "Too big to
> fail" gets no credit, on that one.

May 29 02:37 PM

[Mashuri:]

I predict, in either this coming or the next FOMC announcement, the Fed will announce purchases of the long bond. We'll see a dramatic drop in yield / spike in price at least as big as the first QE announcement and then the big, long leg down in the bond market. Watch the dollar get sacrificed in the process too.

May 29 03:05 PM

[Living4Divi...:]

When you say "Drawdown" what do you mean?

May 29 05:20 PM

[Old Trader:]

Yeah, I'd heard/read that's the next step, as the gov. wishes to keep mortgage rates as low as possible to "save" the housing market (last thing needed would be a spike in mortgage interest rates).


On May 29 03:05 PM Mashuri wrote:

> I predict, in either this coming or the next FOMC announcement, the
> Fed will announce purchases of the long bond. We'll see a dramatic
> drop in yield / spike in price at least as big as the first QE announcement
> and then the big, long leg down in the bond market. Watch the dollar
> get sacrificed in the process too.

May 29 07:17 PM