Rock-bottom yielding 30-year US Treasury from two years ago sold at pandemic sky-high price sells at a 50% discount

Yippee-ki-yay.

 

Inflation is the bill you pay later for the prosperity you borrowed now

 Welcome to later.

The US Treasury crash is epitomized by what's happened to Vanguard's long term Treasury mutual fund VUSTX

 

 

 

 

 

 

 

 

 

 

 

 

The fund is down to $8.36 tonight, 2 cents away from its all time low set on October 19, 1987 at $8.34. That was 35 years ago last night, when the stock market fell 20% in one day.

The 30-year US Treasury back then paid 10.25% on that date. Tonight it pays just 4.24%.

This Vanguard fund, which invests in such securities, year to date has returned -33%. Given the yield discrepancy, it would seem foolhardy to believe that the bottom is in. I wouldn't be surprised if the fund makes dramatic new lows, never before seen.

Meanwhile imagine losing money like that on America's safest of investments.

It's truly appalling and ranks right up there with America losing its AAA status under Barack Obama. I guess it's fitting that it's happening under his former Vice President.

This is a bitter anniversary of fear, and a day of loathing

Exactly 35 years ago tonight this fund marked its all time low at $8.34 when stocks crashed 20% in one day, October 19, 1987.

It happened because it was a flight to safety, the US long bond being the safest haven in the world. Prices move inverse to yields. The price crashed because everyone plowed into it, and the yield soared to 10.25% as a result. As such, the all time price low is meaningless for bonds, but full of meaning for stocks.

At $8.49 tonight, however, the price is just $.15 higher than it was 35 years ago, but for an entirely different reason.

In 1987 the price crashed due to stock market fear; in 2022 it's due to bond market loathing, in particular, loathing of existing US debt which pays too little for the risk being taken. At 4.15% tonight, yield on the long bond has a long way to go to credibility. More importantly, the market is SHOUTING that trillions of dollars of existing US debt pays its holders a reprehensible sum.

People should think hard about what that means.

Faith in America hangs in the balance and is found wanting.

 

 

Bond vigilantes on the move everywhere

 Yippee-ki-yay.

 

 

The COVID-19 emergency continues to Jan 11 despite Biden saying the pandemic's over in September on 60 Minutes: They keep kicking the can down the road to avoid implications for vaccines

 The FDA would have to use the normal process for approving the vaccines, and based on the corners cut to get the vaccines to market, that looks unlikely.

Furthermore, removal of the emergency authorizations would then expose the manufacturers to lawsuits.

I agree with the guy in the last paragraph below.

Expect indefinite emergency use authorization, at least until Republicans take over the federal government in 2025.

The FDA’s ability to issue emergency authorizations for vaccines, drugs and medical devices would not necessarily end when the Covid public health emergency is lifted. These authorizations rely on a separate determination made by the U.S. health secretary under the law that governs the FDA.

But it could become increasingly difficult for HHS and FDA to justify clearing vaccines and treatments through an expedited process that shortcuts the normal system of approval when the emergency declaration is no longer in place.

Trump administration Health Secretary Alex Azar activated the FDA’s emergency authorization powers in March 2020, about two months after first declaring the public health emergency.

“It could affect emergency use authorization, where you couldn’t give these EUAs and so the FDA would have to fully approve the drug,” Gostin said. “It could have enormous knock-on effects that need to be very carefully thought through,” he said of ending the public health emergency.

But James Hodge, an expert on public health law at Arizona State University, said the PREP Act declaration that supports Covid vaccinations at pharmacies and the FDA’s power to grant emergency use authorizations will probably remain in place for years to come.

More.

The economy looks pretty damn good . . . to the inflation profiteers!

 

Earnings aren’t yet painting anything like a picture of an apocalyptic profit slowdown

Not flying at all is my way of fat-shaming people

Hey look, Biden throws another last minute Hail Mary to buy votes with less than 3 weeks to Election 2022!

 

Biden to announce release of up to 15 million barrels of oil from Strategic Petroleum Reserve

 

Biden has cut the emergency reserve from 33 days supply to 20 days, with more cuts to come. 

"Wouldn't be prudent". -- Bush 41

 

 

 

Hey look, another inflation trade!

Fewer units sold at higher prices yields . . . profits!

We are at the bottom of this food money chain.

Procter & Gamble’s earnings beat as higher pricing offsets drop in volume

Jay Powell is only appearing to be serious about battling inflation

 The only thing Jay is doing about inflation is making sure everyone thinks he's doing something about it, while making sure there remains plenty of spread for his pals to trade off it.

Currently the spread is 5.12: Inflation at 8.2 minus an effective funds rate of 3.08. This is a golden opportunity for the banksters and everyone down the food chain until it reaches you. The banks are getting rich off it. Wall Street is getting rich off it. Corporations are getting rich off it. And, of course, the stock market investor parasites are getting rich off it.

You get left holding the bag of all the price increases jacked up under the guise of the general condition.

 

 

 

Three years ago there was no spread: -0.03. Nothing there to exploit.

The banksters LOVE LOVE LOVE this inflation:

Bank of America said Monday that quarterly profit . . . topped expectations on better-than-expected fixed income trading and gains in interest income . . . third-quarter profit fell 8% to $7.1 billion.

The bond market is not happy.

In Rama a voice is heard, lamentation, weeping, and great mourning . . ..

I would like to come back as the bond market . . . You can intimidate everybody

 Yippee-ki-yay.

 

 

Long US Treasury and Investment Grade bonds both made new 52-week lows again last night

Yippee-ki-yay.

 

Bond vigilantes be like . . .

 Yippee-ki-yay, motherfucker.

 

Through Oct 14 the traditional 60/40 401k portfolio is down a net 21% in 2022, not counting inflation

 Bonds are supposed to perform well as the safe haven asset when stocks fall, reducing the net impact to the portfolio when equities decline.

But not this year!

Bonds have actually crashed on the long end, down even more than stocks, as stocks entered a bear market.

The bond crash is a market statement rebuking the spending those bonds have represented: Not enough return for the risk.

So far the spendthrift Congress remains tone-deaf, leaving it to the Fed to raise interest rates . . . ever so feebly.

No one in his right mind believes raising interest rates 300 basis points is going to have much impact on inflation raging at 800 basis points.

That's because spending money you don't have to save the economy destroys the economy

 

Dems Spent $2T to Save Economy, But Won't Talk About It

Jim Tankersley, NYT

You can't get this kind of information just anywhere, and you know why

Wawa shuttering two Philadelphia stores amid city's retail crime surge:

Retail theft is up more than 50% in Philadelphia

Jim Cramer's stupid people who made a lot of money on Oct 13 weren't stupid until today, when they gave it all back, lol

Jim thought the market would tank on the inflation news. Instead it rallied.

But the market took it all back today.

Jim is nothing if not entertaining, as are other market cheerleaders.

Gayed meanwhile fully expected the rally to continue today.

Tonight there is much weeping and gnashing of teeth behind the brave faces.

Traditional 60/40 portfolio fails to protect investors when both stocks and bonds dive: Worst in 100 years

 

CNBC S&P 500 chart doesn't show the 2022 low-to-date on 10/12/22 like Yahoo Finance and Google Finance even though they mentioned it